In January, U.K mortgage approvals dropped to an 8-month low.

Lenders granted 48,198 loans to buy homes, compared with 58,223 in December, the Bank of England said today in London. The median of 22 economist forecasts in a Bloomberg News survey was for 50,000. Gross mortgage lending dropped to the lowest level since 2000.

Bank of England policy maker Kate Barker said last week the property market may face “adjustments” as banks curb lending, and Hometrack Ltd. said today that price gains observed last month don’t have solid foundations. The longest cold snap in three decades, an increase in transaction tax and the looming election may also have damped activity, economists said.

“We could be seeing a cool-off later this year,” James Knightley, an economist at ING Financial Markets in London, said in a telephone interview. “With election uncertainty intensifying, it could lead people to put off big purchases. There are still issues about credit availability and public- sector spending cuts.”

The pound fell as much as 0.7 percent against the dollar after the report, and traded at $1.5162 as of 10:14 a.m. in London, down 1 percent on the day. The yield on the benchmark two-year gilt was up 0.4 basis points today at 0.97 percent.

Recovery Evidence

Other data published today show other parts of the economy are growing, suggesting the U.K. faces an uneven recovery. An index of manufacturing held at 56.6 in February, the highest since October 1994, the Chartered Institute of Purchasing and Supply and Markit Economics said today. A reading above 50 indicates expansion. The groups’ measure of export orders climbed to the highest since records began in January 1996.

Voter opinion polls show Prime Minister Gordon Brown is narrowing the opposition Conservatives’ lead before the election due by June. A poll by YouGov Plc published yesterday gave the Conservatives the support of 37 percent, down two percentage points, and Labour the backing of 35 percent, up two points.

The Bank of England said today that net mortgage lending rose in January to 1.5 billion pounds ($2.3 billion) from 1.2 billion pounds the previous month. Still, overall gross home loans dropped to 10.2 billion pounds, the lowest level in more than nine years.

‘Challenging Period’

HSBC Holdings Plc said today that it “continued to support its customers” in a “challenging period” by offering 15 billion pounds in new mortgage lending in the past year.

“Average loan-to-value ratios were less than 55 percent, and we grew our market share of net new mortgage lending to 11 percent,” the bank said in a statement.

The Building Societies Association said in a separate report that snowfall across the country last month, along with a surge in requests for loans at the end of last year before a property tax increase in January, may have limited lending.

“Low activity in the month was expected following the surge of buyers aiming to beat the end of the stamp-duty relief in December,” Adrian Coles, director-general of the BSA, said in a statement. “The adverse weather conditions experienced at the start of the year have further suppressed market activity.”

Today’s central bank report showed that consumers added to their unsecured debts in January. Net consumer credit rose by 500 million pounds. Economists predicted a 100 million-pound drop, according to the median of 20 forecasts. Credit-card lending rose by 171 million pounds, while personal loans and overdrafts increased by 330 million pounds.

Source: Bloomberg