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UK mortgage approvals pick up in December, consumer credit slows
[LONDON] British mortgage approvals rose in December for the first time since June, the Bank of England said on Friday, suggesting that a steady slowdown in the number of loans for home purchases could be bottoming out.
Data from the BoE also showed a sharp slowdown in December in borrowing by British consumers whose spending has driven the country's economic recovery.
The BoE said mortgage approvals for house purchases numbered 60,275 last month, up from 58,956 in November.
Analysts in a Reuters poll had forecast 59,000 mortgage approvals were made in December.
Tighter rules on mortgage lending took effect last year, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans.
The number of approvals fell in most months last year, cooling house price growth and easing concerns about a bubble in the housing market.
Mortgage lender Nationwide said on Thursday that British house prices rose at their slowest pace in 14 months in January, rising by less than 7 per cent in year-on-year terms.
Before the 2008 financial crisis, monthly mortgage approvals ran at around 90,000.
Net mortgage lending, which lags approvals, rose by 1.612 billion pounds (S$3.3 billion), slowing from November and below expectations.
The BoE also said lending to consumers rose by a slower-than-expected annualised rate of 7.2 per cent in the three months to the end of December, slowing from its strongest pace in nearly a decade in November.
Despite only weak rises in wages for much of the past five years, Britain's economic recovery has become increasingly reliant on spending by households as the slowdown in the eurozone and some other major economies hit demand for exports.
Retail sales volumes grew in December when economists had expected a fall, according to official data published last week. A private-sector survey on Thursday showed sales probably remained strong in January too as falling oil and food prices gave consumers more spending power.
And a survey published earlier on Friday showed consumer confidence in January hit its highest level since August, possibly signalling a turnaround in mood among voters that could help Prime Minister David Cameron in a national election in May.
The BoE said on Friday that consumer credit grew by 578 million pounds in the month of December, much less than a forecast of 1.2 billion pounds in a Reuters poll of economists.
Lending to non-financial businesses slumped by nearly 3.8 billion pounds in December, the biggest fall since June.
Lending to small businesses alone fell by just over 1.0 billion pounds.