The Bank of England (BoE) has released figures showing mortgage approvals for new house purchases climbed from 72,798 to 76,947 in January – their highest level since November 2007.
However, mortgage approvals remained 25 per cent below their pre-crisis levels.
UK economist for London-based consultancy Capital Economics Samuel Tombs, said:
There is little reason to fear that the economic recovery will end in tears because it is based on an unsustainable credit boom.
Data on the Funding for Lending Scheme (FLS) showed net lending to households and businesses participating in the scheme reached £5.8bn in the fourth quarter.
Outstanding aggregate drawings in the first part of the Scheme was £41.9bn. The number of groups taking part in the scheme rose by four over the period, taking the number of groups participating to 46.
Cumulative net lending by FLS participants was £10.3bn over the 18 months from the third quarter of 2012 to the fourth quarter of 2013. The BoE said the scheme had been successful in its objective and pointed out that prior to the announcement of the FLS bank lending was widely expected to decline rather. than increase over the next 18 months.
The MPC’s favoured measure of bank lending (M4 lending, excluding intermediate OFCs and the effects of securitisations) was just 0.2 per cent above what it was at the same time last year.
In December, the Bank announced it would be ending the Funding for Lending Scheme (FLS) mortgage incentives
Lending to non-financial businesses dipped £0.6bn in January, and 3.9 per cent year-on-year. Small firms also reduced their borrowing by £300m.
Commenting on today’s data, Paul Fisher, executive director for markets at the Bank of England, said:
The UK recovery has gained momentum, with easier credit conditions playing an important role. Since the FLS was launched in mid-2012, FLS participants’ net lending to households and businesses has been around £10bn.
In 2014 the FLS will continue to support lending to businesses, where it is most needed. The firm-by-firm sectoral lending data - published for the first time today - show that a number of participants, including some smaller, challenger banks, have successfully used the FLS to expand their SME lending.