January 4, 2012 / 11:57 AM / 8 years ago

November mortgage approvals up but overall lending weak

LONDON (Reuters) - Mortgage approvals rose to their highest level in almost two years in November, but net lending sank to its lowest since June, Bank of England data showed, underscoring a weak outlook for consumer demand.

The Bank of England said on Wednesday that mortgage approvals numbered 52,854 in November, up from 52,786 in October. Analysts had forecast a reading of 52,300.

Before the 2008 financial crisis, monthly mortgage approvals ran at around 90,000, but the number of home sales has slumped since then and the property market has ceased to be a major driver of consumer spending.

Two weeks ago data from the British Bankers’ Association showed a small fall in the number of mortgage approvals for house purchase in November, and the lowest amount of net mortgage lending on record .

The BoE figures showed that net mortgage lending halved in November to 0.6 billion pounds — below economists’ forecasts — although unsecured consumer credit rose slightly faster than expected, with a net increase of 0.4 billion.

Taking net secured and unsecured lending together, this fell to 965 million pounds in November, its lowest since June.

Consumer morale is at its weakest in nearly three years, due to fears that the economy may be slipping back into recession, as well as government spending cuts and sluggish wage increases.

Retail sales volumes have barely grown over the past year, according to official data, and clothing retailer Next said in a trading update earlier on Wednesday that sales had disappointed in November and December.

Britain’s consumers have been reluctant to take on more credit for major purchases due to rising unemployment and tight bank lending conditions.

The BoE’s preferred gauge of money supply, M4 excluding intermediate other financial corporations, was flat on the month, and just 2.6 percent up on the year.

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