u.k. mortgage approvals rise

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March 30 (Bloomberg) -- U.K. mortgage approvals rose in February as the Bank of England lowered interest rates, a sign the housing slump may be reaching a bottom.

Loans for home purchase rose to 38,000, compared with 32,000 in January, the U.K. central bank said today in London. Economists predicted 34,000, according to the median of 21 forecasts in a Bloomberg News survey.

The lowest central bank interest rate since 1694 and Prime Minister Gordon Brown's plan to guarantee bank's assets may be starting to slow the housing market's yearlong slump. The pace of house-price declines was the slowest in 10 months in March, Hometrack Ltd. reported today.

``The housing market isn't about to start booming, but the intensity of the pain will probably recede,'' said Amit Kara, an economist at UBS AG in London. ``We may have reached a bottom in mortgage activity.''

Net lending secured on dwellings rose 1.5 billion pounds after a 1.1 billion-pound gain in January. Consumer credit fell by 200 million pounds ($282 million) on the month, the weakest since records began in April 1993, today's report showed.

Brown is guaranteeing assets for Royal Bank of Scotland Group Plc to prevent its collapse. Chancellor of the Exchequer Alistair Darling ordered Northern Rock to expand lending by 14 billion pounds on Feb. 23.

The economy contracted at the sharpest pace since 1980 in the fourth quarter and joblessness rose the most since at least 1971 in February. The Bank of England lowered the benchmark interest rate to 0.5 percent on March 5, the lowest in its three- century history.