Mortgage approvals on the increase
The number of mortgage approvals made to home buyers surged to its highest levels in nearly six years, the Bank of England has reported.
Some 70,758 loans worth £11.1 billion were approved for house purchase in November, marking the highest total seen since 72,004 loans were given the green light in January 2008.%VIRTUAL-SkimlinksPromo%
But the revival seen in the housing market was not extended to business lending and the Bank's figures also showed that net lending to non-financial businesses fell by £4.7 billion in November, marking the biggest slide since the series started in spring 2011.
A key Government scheme called Funding for Lending, which boosted mortgage availability over 2013, is being refocused towards helping businesses.
The figures were released as building society Nationwide reported that house prices have surged by 8.4% over 2013 across the UK as the market revival has become increasingly broad-based.
Prices rose by 1.4% month-on-month in December to reach £175,826 on average, although they remain about 5% below all-time highs recorded in late 2007, Nationwide said.
Samuel Tombs, UK economist at Capital Economics, said the Bank's figures show that "while mortgage borrowing is continuing to recover, lending to the rest of the economy has remained subdued".
He suggested that the launch of the Government's new Help to Buy mortgage guarantee scheme in October, to give people with low deposits help on or up the housing ladder, had helped to boost the figures.
Mr Tombs said: "Looking ahead, only a gradual recovery in bank lending continues to look likely. While new buyer enquiries at estate agents have reportedly continued to rise, anecdotal evidence suggests that many applicants are still failing banks' strict affordability tests.
"What's more, mortgage rates could rise soon in response to recent increase in market interest rates and the Bank of England's decision at the end of November to remove the incentives that the Funding for Lending Scheme provides to expand mortgage lending.
Meanwhile, firms' large cash stockpiles may mean that their appetite for external funds remains depressed. So all in all, lending seems unlikely to pick up in 2014 to levels that would come close to resembling another credit boom."
Howard Archer, chief European and UK economist at IHS Global Insight, said there have been signs that firms are looking to step up their borrowing amid improved economic activity, which is lifting their confidence as well as increasing their need for capital.
He said: "As demand for credit does pick up, it is vitally important for healthy and more balanced UK growth that all companies who are in decent shape and who do want to borrow - whether it be to support their operations, lift investment, explore new markets - can do so, and at a non-punishing interest rate."
The Bank's figures also showed that as Christmas approached, credit card lending to consumers increased by £388 million in November, which is above the previous six-month average of £200 million.
Credit card lenders have been battling it out in recent months with long-running 0% interest deals.
But borrowing on personal loans and overdrafts increased at a slower pace than the previous six-month average. There was a £239 million increase in this type of borrowing in November, compared with the average increase of £500 million over the previous six months.
Separate figures released by the Building Societies Association (BSA) indicated that many people raided their savings pots in the run-up to Christmas.
Retail savings balances held by mutuals fell by £590 million in November - compared with an increase of £660 million in the same month a year earlier.
Robin Fieth, chief executive of the BSA, said: "Savings balances at mutuals fell in November, but are up significantly up in the first 11 months of 2013 compared to the same period in 2012."
The BSA said that in the first 11 months of 2013, savings balances rose by £6.7 billion, which is triple the £2.2 billion increase seen between January and November 2012.