February 29, 2012 / 9:37 AM / 8 years ago

Mortgage lending and approvals post surprisingly strong rise

LONDON (Reuters) - Mortgage lending and mortgage approvals for house purchase posted a surprisingly strong rise in January, official data showed in a sign that the sluggish housing market is improving.

The figures support forecasts for a pick-up in consumption this year as the housing market is a vital component of consumers’ wealth in Britain.

However, in a sign that many Britons remain cautious, the data also showed that credit-card and other unsecured lending remains largely flat.

The Bank of England said on Wednesday mortgage approvals numbered 58,728 in January, up from an upwardly revised 55,019 in December and well above analysts’ expectations for a reading of 53,700.

The total number was the highest since December 2009 and the month-on-month increase was the strongest since June 2009.

Before the 2008 financial crisis, monthly mortgage approvals ran at around 90,000, but the number of home sales has slumped since then.

Consumer credit rose by 100 million pounds in January and mortgage lending climbed by 1.6 billion. Analysts had forecast a 200 million-pound rise in consumer credit and an 800 million-pound increase in mortgage lending.

The BoE’s preferred gauge of money supply - M4 excluding intermediate other financial corporations - posted a 1.9 percent rise on the month, the strongest increase since records began in July 2009.

The central bank predicts that growth will pick up later this year as consumers start spending more thanks to a fall in inflation, which will ease the squeeze on household budgets.

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