Mortgage lending 'at six-year high'
%VIRTUAL-SkimlinksPromo%The number of mortgage approvals granted to home buyers lifted to its highest level in six years in December, Bank of England figures show.
Some 71,638 approvals with a total value of £12.4 billion got the go-ahead last month, marking the highest number seen since January 2008.
But experts said that while borrowing for house purchases looks set to lift further in the next few months, the latest figures also showed a "striking divergence" between the pick-up in lending to households and borrowing by businesses.
Martin Beck, a UK economist at Capital Economics, said: "A striking divergence between the provision of credit to households and firms persists... the recovery in lending continues to display an even more marked lack of balance than the economic recovery as a whole."
The report said that lending to non-financial companies fell by £1.9 billion in December, following a sharper drop of £4.6 billion in November, which had been the biggest slide since the series started in spring 2011.
The Bank's figures also showed that despite the run-up to Christmas, growth in consumer borrowing on credit cards dropped to an eight-month low in December, with an increase of £135 million recorded for the month.
Overdraft and personal loan lending increased by £467 million in December, which the Bank said is "in line" with the average monthly increases recorded over the previous six months.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "While slightly reduced consumer borrowing in December modestly eases concern that consumers are building up their debt, it also fuels uncertainty as to how robust consumer spending will be over the coming months."
The latest mortgage approval figures add to a flood of reports pointing to the housing market revival broadening out across the country amid improving consumer confidence and a string of Government schemes such as Help to Buy to support would-be home buyers with smaller deposits.
The Bank's report echoes a recent report from the British Bankers' Association (BBA) which also said that mortgage approvals to home buyers surged to a six-year high in December, which the BBA said reflected the "more active housing market".
Building society Nationwide reported this week that house prices surged by 8.8% year-on-year across the UK in January while the Land Registry said that London house prices jumped by 11.2% over 2013.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said he expects to see a continued rise in mortgage lending in the coming months as a new phase of Help to Buy, which was launched in
October to offer state-backed mortgages to people with 5% deposits, "gets into its stride".
Funding for Lending, a key Government scheme which helped to boost mortgage availability over 2013, has been refocused this year towards helping businesses.
Dr Archer pointed out that the fall in business lending comes despite a recent survey by the Bank of England reporting a "significant" increase in credit availability to corporates, with a further increase expected in the first quarter of 2014.
He said: "With the UK sustaining a decent level of economic activity and prospects looking relatively bright, it seems highly likely that business demand for credit will pick up appreciably over the coming months."
See the latest mortgage rates and get expert advice
The people who affect house prices
Mortgage lending 'at six-year high'
Discover More Like This
BACK TO SLIDE