LONDON (Reuters) - British lenders approved the highest number of mortgages in January since November 2007 and more than analysts had forecast, another sign of momentum in the country’s housing market.
Bank of England data also showed another fall in business lending, underscoring one of the challenges for the economy in 2014 although the pace of decline slowed.
Britain’s economy in 2013 had its best year of growth since the financial crisis. But the recovery so far has been largely driven by housing and the consumer sector. The BoE has said exports and business investment will need to strengthen in 2014 for growth to last.
Monday’s data showed 76,947 mortgages were approved in January, up from December’s 72,798.
Analysts had forecast 73,500 approvals in January.
Mortgage approvals are still short of levels of around 90,000 a month seen before the 2008 financial crisis.
BoE Governor Mark Carney and other officials have played down suggestions that the housing market is overheating.
Even so, the BoE refocused its Funding for Lending Scheme away from mortgage lending and exclusively on business lending at the start of this year.
The BoE said that lending to non-financial businesses fell again in January, down 0.6 billion pounds after a steeper fall of 1.7 billion pounds in December. Lending to small businesses alone fell by 0.3 billion pounds.
Unsecured lending to consumers rose by 0.7 billion pounds, in line with the forecast in the Reuters poll.
The BoE’s preferred gauge of money supply, M4 excluding intermediate other financial corporations, rose 0.1 percent on the month, taking the annual growth rate to 3.1 percent.
The government launched the Funding for Lending Scheme with the BoE in 2012 to help lift the economy out of recession. The central bank made cheap funds available to banks and building societies on the condition they lent to UK households and businesses.
Net lending by banks was 5.8 billion pounds during the fourth quarter of 2013.
Banks have so far drawn down nearly 42 billion pounds from the FLS and net lending has risen by 10.3 billion pounds overall since its launch in July 2012.
Reporting by William Schomberg and Andy Bruce