Remortgage approvals reached nine-year high in November


Remortgage loan approvals hit a nine-year high in November, just as borrowers were experiencing the first base rate rise in over a decade, Bank of England figures show.

Some 53,922 remortgage loans were approved, marking the highest figure since October 2008, the Bank's Money and Credit report said.

The report also showed that consumers' borrowing using credit cards, personal loans and overdrafts fell back to a near two-year low in the run-up to Christmas, prompting suggestions that rising interest rates may have had a "significant psychological impact" on some potential borrowers.

The number of mortgage approvals made to home buyers also edged up month-on-month in November, to 65,139, from 64,887 in October.

This figure was still slightly below the monthly average of 66,562 over the previous six months.

The Bank of England base rate was increased from 0.25% to 0.5% in early November - the first increase in more than 10 years.

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said the large number of remortgage loans in the latest figures suggests borrowers were seeking to protect themselves from further potential increases in interest rates.

Discussing the housing market generally, he said: "Looking forward, we anticipate a fairly steady market in early 2018 and no great changes one way or another, with realistic vendors much more likely to do deals rather than those who are still holding out for unrealistic prices."

The annual growth rate of consumer credit - which includes borrowing using credit cards, personal loans and overdrafts - slowed to 9.1% in November, the lowest rate since December 2015.

The Bank said the weaker rate of growth in consumer credit was partly due to a particularly strong flow of consumer credit in November 2016 falling out of the latest annual figure.

Concerns have been raised that recent strong growth levels in consumer credit could suggest some households are at risk of over-stretching their borrowing.

In August, the annual growth rate in consumer credit was in double digits, at 10%, before slowing to 9.8% in September and 9.5% in October, then 9.1% in November.

Howard Archer, chief economic adviser for EY ITEM Club, said: " It remains to be seen just how much effect the Bank of England's interest rate hike at the start of November has in dampening impact on consumers' willingness to borrow.

"While the increase was just 25 basis points and interest rates are still at historically very low levels, there could well have been a significant psychological impact on potential borrowers given that it was the first interest rate hike since 2007.

"It does appear that lenders have been reining in the amount of unsecured credit available to consumers and tightening their lending standards."

He said increased concerns over personal finances may be encouraging some consumers to be more cautious in their borrowing.

Mr Archer added: "However, the persistent squeeze on consumer purchasing power is likely continuing to fuel the need for some consumers to borrow."