UPDATE:UK Consumer Loans Slow; Mtge Approvals Up For 5th Mo

LONDON -- Total consumer lending eased again in June and posted the lowest increase since records began in April 1993, as consumers' appetite for both secured and unsecured credit remained subdued, data from the Bank of England showed Wednesday.

Total consumer lending grew just GBP414 million in June, compared with a revised GBP485 million in May.

The data are much weaker than expected as economists surveyed last week by Dow Jones Newswires had forecast a gain of GBP0.9 billion.

The BOE originally reported consumer lending grew GBP624 million in May.

While lending levels remain subdued - U.K. Chancellor of the Exchequer Alistair Darling met with banks Monday to discuss the weak levels - mortgage approvals rose for the fifth straight month in June to a 14-month high of 47,584.

That compares with May's upwardly revised 44,169 and suggests the housing market is continuing its slow but steady climb from the steep drops in prices and activity seen throughout 2008.

The increase was broadly in line with economists' expectations for 47,000, while the BOE originally reported mortgage approvals totaled 43,414 in May.

"On average approvals have risen by around 3,000 per month for the last five months and is loosely following the upward trend in the Royal Institution of Chartered Surveyors new buyer enquiries series," said Alan Clarke, U.K. economist for BNP Paribas SA. "At 47,000, approvals are still at a very low level. Nonetheless, this series continues to indicate that demand for housing is recovering."

The further slowdown in lending, meanwhile, was driven by an unexpected easing of consumer credit - the recent run of firmer retail sales data were thought to be indicative of a rise in credit card spending, while mortgage lending remained close to the record low reported in May.

Consumer credit grew GBP71 million in June compared with a GBP153 million gain in May. And, mortgage lending grew GBP343 million in June compared with May's record low gain of GBP331 million.

Both the May rises for consumer credit and mortgage lending were revised from the BOE's previously reported gains of GBP300 million for consumer credit and GBP324 million for mortgage lending.

The data were again much weaker than economists forecasts for a GBP300 million rise in consumer credit and a GBP600 million mortgage lending increase.

The breakdown of consumer credit shows that credit-card lending grew GBP167 million in June. That compares with a GBP174 million rise in May and was the lowest level since December last year. Other unsecured lending posted a net repayment of GBP96 million in June, the BOE said.

"U.K. lending data is weaker than expected, which again highlights the lack of credit availability in the economy and the likelihood of a muted recovery," said James Knightley, U.K. economist for ING Economics.

And, the data were closely followed by a mortgage lending report from the Building Society Association, broadly in line with the BOE's data.

The BSA said net mortgage lending fell GBP511 million in June following a GBP751 million decline in May.

The BSA also reported an increase in mortgage approvals of GBP1.817 million in June, up from GBP1.607 million in May.

"Lending remains at historically low levels, and is 40% lower than in June 2008," said Brian Morris, head of savings policy at the BSA. "Mortgage approvals show signs of stabilising as they reached a year high of GBP1.8 billion, but are more than 30% down on this time last year."