UK December mortgage approvals hit four-month high

[LONDON] British mortgage approvals unexpectedly rose in December to their highest since August and consumer credit recorded its sharpest annual growth in nearly a decade, Bank of England (BoE) data showed on Monday.

Mortgage approvals for house purchases numbered 70,837 in December from 70,424 in November, bucking analysts' expectations in Reuters poll for a fall to 69,600.

The number of approvals rose throughout most of 2015, after a slowdown the previous year after tougher checks on mortgage borrowers were introduced.

Unsecured consumer lending grew at its fastest year-on-year rate since February 2006, up 8.6 per cent and after an 8.4 per cent rise in November.

But net lending flows on the month slowed to 1.169 billion pounds (S$2.38 billion) from 1.479 billion pounds in November, the weakest since May and in line with soft December retail sales figures.

British house prices rose robustly in 2015 as a whole, bolstered by cheap borrowing costs and record employment levels. The government and BoE have increasingly been looking at measures to curb lending to buy-to-let landlords.

Flows of net mortgage lending slowed in December to 3.204 billion pounds, their lowest since July and down from 3.755 billion pounds in November. Analysts had expected 3.7 billion pounds.

Last week mortgage lender Nationwide reported house price growth slowed more than expected in January, and the British Bankers' Association reported a 7-month low in mortgage approvals, though other surveys still point to robust property price inflation.

Britain's economic recovery is still heavily reliant on spending by households.

The BoE said lending to non-financial businesses dropped by 3.686 billion pounds, and lending to small businesses that are typically more reliant on bank lending fell by 299 million pounds.

However, the pace of decline is easing and annual growth in small business lending is at its highest rate in over three years.

Foreign investors sold a net 1.688 billion pounds of British government bonds in December, after near-record purchases in October and November.

REUTERS