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LONDON, March 3 (Reuters) - British lenders approved the highestnumber of mortgages in January since November 2007 and more thananalysts had forecast, another sign of momentum in the country'shousing market.
Bank of England data also showed another fall in businesslending, underscoring one of the challenges for the economy in2014 although the pace of decline slowed.
Britain's economy in 2013 had its best year of growth sincethe financial crisis. But the recovery so far has been largelydriven by housing and the consumer sector. The BoE has saidexports and business investment will need to strengthen in 2014for growth to last.
Monday's data showed 76,947 mortgages were approved inJanuary, up from December's 72,798.
Analysts had forecast 73,500 approvals in January.
Mortgage approvals are still short of levels of around90,000 a month seen before the 2008 financial crisis.
BoE Governor Mark Carney and other officials have playeddown suggestions that the housing market is overheating.
Even so, the BoE refocused its Funding for Lending Schemeaway from mortgage lending and exclusively on business lendingat the start of this year.
The BoE said that lending to non-financial businesses fellagain in January, down 0.6 billion pounds after a steeper fallof 1.7 billion pounds in December. Lending to small businessesalone fell by 0.3 billion pounds.
Unsecured lending to consumers rose by 0.7 billion pounds,in line with the forecast in the Reuters poll.
The BoE's preferred gauge of money supply, M4 excludingintermediate other financial corporations, rose 0.1 percent onthe month, taking the annual growth rate to 3.1 percent.
The government launched the Funding for Lending Scheme withthe BoE in 2012 to help lift the economy out of recession. Thecentral bank made cheap funds available to banks and buildingsocieties on the condition they lent to UK households andbusinesses.
Net lending by banks was 5.8 billion pounds during thefourth quarter of 2013.
Banks have so far drawn down nearly 42 billion pounds fromthe FLS and net lending has risen by 10.3 billion pounds overallsince its launch in July 2012.
