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[LONDON] British lenders approved the fewest mortgages since June 2013 in October but consumer lending boomed, official data showed on Monday, as shoppers' morale stayed high despite a loss of momentum in the housing market.
The Bank of England said that consumer lending rose at its fastest annual rate since the run up to the financial crisis, with credit expanding by 6.4 per cent on the year, a pace last exceeded in July 2006.
This chimes with official national accounts data last week, which showed household spending rising at its fastest pace in four years in the three months to September, as well as private-sector surveys showing strong appetite for big purchases.
This positive morale will cheer finance minister George Osborne as he prepares to present a budget update on Wednesday - his penultimate one before May's national election.
But although Britain's economy is enjoying some of its fastest growth in a decade, Prime Minister David Cameron has warned of global dangers ahead.
Britain's slowing housing market may also be a source of concern, if an easing from rapid growth earlier this year heralds broader economic weakness.
Mortgage approvals for house purchase fell to 59,426 from September's 61,234, in line with economists' forecasts.
Mortgage lender Nationwide said on Friday that mortgage approvals were running at just two thirds of historic rates, and that house prices in the three months to November increased at the slowest rate since June 2013.
Earlier this year Britain's Financial Conduct Authority required banks to make closer checks on borrowers' ability to repay loans, and the BoE has also urged lenders to limit lending at high multiples of borrowers' income.
Net mortgage lending, which tends to lag behind approvals, rose 1.496 billion pounds, the smallest increase in nearly a year.
While mortgage lending has expanded by 1.8 per cent over the past 12 months - its joint-biggest increase since March 2009 - this is driven by increases earlier in the year, and in the most recent three months, growth as fallen to its lowest since March.
Figures for business lending showed continued falls in the net amount of credit extended to firms.
Business investment fell unexpectedly in the three months to September, according to official data, raising some doubts about the sustainability of Britain's recovery in the face of weaker overseas demand.