LONDON (Reuters) - Mortgage approvals rose unexpectedly in November to their highest level since July, Bank of England data showed on Tuesday, chiming with a surprisingly resilient house price survey last week.
Other data on Tuesday showed the strongest expansion in manufacturing activity in 16 years, offering some comfort at the start of a year that sees a rise in value-added tax and swingeing public spending cuts.
But the outlook for consumer spending remains uncertain, with the Bank data showing the biggest fall in consumer lending since July and record declines in money supply growth.
Mortgage approvals for house purchases rose to 48,019 in November from 47,315 in October, in contrast to economists’ expectations for a slight fall.
However, November’s reading is still well below levels of a year ago and a long-run average of about 90,000 mortgage approvals a month.
“This is slightly better than expected but these are very low levels suggesting the mortgage market has a long way to go before we can consider it healthy,” said UBS economist Amit Kara.
Net consumer credit weakened with an unexpected drop of 121 million pounds versus rises in the previous two months.
A survey released last month by mortgage lender Nationwide showed an unexpected 0.4 percent increase in house prices in December, but over the year as a whole prices have essentially stagnated. Many expect modest declines over the course of 2011, but few see a return to the sharp falls of late 2008 and early 2009.
The headline rate of M4 money supply growth fell in November by a record 1.4 percent on the year. The Bank’s preferred measure, which strips out holdings of financial intermediaries s, did slightly better, rising by 0.2 percent on the month. In the three months to November, the measure was 1.4 percent higher than the same period in 2009.
Editing by Patrick Graham