By David Milliken and William Schomberg
LONDON (Reuters) - Britain's housing market appeared to benefit from a brief lull in Brexit worries last month, Bank of England data showed on Monday, but consumer lending growth was the weakest in over five years, adding to the mixed signals coming from the economy.
Uncertainty about Brexit has weighed on house prices, especially in London and southeastern England, since voters decided in June 2016 to leave the European Union.
But there have been signs of a stabilization coinciding with the decision to extend the original March 29 deadline for Britain's EU departure until the end of October, and the closely watched RICS poll of surveyors has recovered in recent months.
The BoE said the number of mortgages approved for house purchase rose to 66,440 in June from 65,647 in May.
That was the highest since January and above the average forecast from economists in a Reuters poll.
Net mortgage lending, which typically lags behind approvals, also rose more than expected, up by 3.7 billion pounds ($4.6 billion) in June.
"June's mortgage data ties in with the view that housing market activity has got some help from the avoidance of a disruptive Brexit at the end of March," Howard Archer, economist at EY ITEM Club, said.
Faster wage growth and a jobs boom are also supporting house prices but Archer said he expected them to rise by no more than 1.5% this year, roughly their current growth rate.
If Britain leaves the EU without a deal on Oct. 31 - something Prime Minister Boris Johnson says his government is actively preparing for - then house prices could quickly fall by around 5%, Archer added.
Last week industry body UK Finance reported the number of approvals for house purchase near a two-year high in June, while its measure of consumer lending growth picked up slightly.
The BoE said net lending to consumers in June alone rose by 1.046 billion pounds, again faster than forecast and stronger than in recent months.
However, it is lower than the average monthly increase of around 1.5 billion pounds chalked up in the 12 months to June 2018 and the annual rate of lending growth slowed to 5.5% from May's 5.7%, the weakest since April 2014.
British consumer spending has been a driving force of growth since the Brexit referendum, helping to offset a drying up of business investment. But in recent months it has lost momentum.
The slowdown partly reflects strong spending a year ago, boosted by major sporting events, such as the men's soccer World Cup, and better weather.
By contrast, business lending rose by 2.6 billion pounds in June - above its post-referendum average - to give an annual growth rate of 4.4%, the highest since the series started in 2012.
"Firms haven't suddenly adopted a defensive mindset, despite the risk of a no-deal Brexit," Samuel Tombs, an economist at Pantheon Macroeconomics, said.
Increased borrowing was concentrated in larger firms, however, and borrowing by small businesses was almost flat.
A separate survey by Bibby Financial Services, which offers trade finance, reported that half of small businesses feared a recession this year and 44% were struggling with cashflow, in part due to pre-Brexit stockpiling of raw materials.