UK mortgage approvals hit a five-year peak

BRITISH lenders approved the most mortgages in over five years last month as borrowing costs sank to their lowest in a decade, central bank data showed yesterday, setting the stage for further house price rises.

Business lending also picked up – though only for larger firms – but the figures did little to dispel concerns that the UK economic recovery will remain heavily reliant on consumer demand for the immediate future.

Mortgage approvals for house purchases rose to almost 67,000 in September from just under 64,000 in August – its highest level since February 2008, though below a pre-crisis average of around 90,000 and in line with economists’ forecasts.

“A further pick-up in housing market activity is in the pipeline. But we think it unlikely that this will change the Bank of England’s view that this is anything other than a gradual recovery in house prices, at least for now,” said Jens Larsen, chief UK economist at Royal Bank of Canada.

Net unsecured consumer borrowing grew at an annualised rate of 4.4 per cent in the three months to September, though the £411m increase in September alone was smaller than economists had expected and what was seen in earlier months.

Net business lending – which the BoE and the government are keener to promote – picked up after a sharp fall in August and rose by £720m, the biggest jump since January, but is still 3.2 per cent lower than a year earlier.

Net lending to small and medium-sized firms fell by £383m.