U.K. mortgage approvals rose in December to the highest level in almost six years, a sign the property market remained strong at the end of last year.
Lenders granted 71,638 loans for house purchase, the most since January 2008 and up from with 70,820 in November, the Bank of England said in a report in London today. The median forecast of 23 economists in a Bloomberg News survey was for 72,900 approvals. Business loans fell 3.4 percent from a year earlier, underlining the growing gulf between corporate and consumer lending.
House prices rose for a 13th month in January to their highest level in almost six years, Nationwide Building Society said yesterday. Increasing values prompted the Bank of England to end support for home loans under its Funding for Lending Scheme in November and BOE Markets Director Paul Fisher said last week that sharply rising prices are a potential source of financial instability.
“There’s been a sustained rise in recent months but we’re some way below the peak reached in boom years,” said Sarah Hewin, head of research at Standard Chartered Bank in London. “It’s more a return to normality. We’d expect to see a continued recovery in the housing market and continued rising mortgage applications.”
The pound stayed lower against the dollar after the data were published. The currency was trading at $1.6490 as of 9:36 a.m. London time, down 0.4 percent on the day.
Help to Buy
Net mortgage lending was 1.7 billion pounds ($2.8 billion), the highest since January 2012 and up from 1.1 billion pounds in November, the central bank said. Consumer credit increased 602 million pounds, including 135 million pounds on credit cards.
Demand for houses has been partly fueled by a government incentive program known as Help to Buy, which guarantees loans to those who can only afford a small down payment.
Business lending fell 1.9 billion pounds in December from the previous month. Lending to small and medium-sized companies dropped 1.2 billion pounds, declining 2.7 percent from a year earlier.
Foreign investors bought a net 10.2 billion pounds of gilts in December, the central bank said. That followed a net purchase of 15.9 billion pounds in November. M4, a broad measure of money supply, fell 1.4 percent and was up 0.2 percent on the year. An underlying measure rose 3.7 percent on a 3-month annualized basis.