Bank of England data released yesterday sent out mixed messages, with mortgage approvals at their highest level in more than a year, but unsecured lending slowing down.
Bank figures showed that house purchase approvals rose to 107,000 in September, up marginally from 106,000 in August.
This puts mortgage approvals at their highest level since June last year, adding yet more weight to claims that the housing market remains bullish.
Unsecured lending rose by 1.249bn pounds after a rise of 1.321bn in August. Both figures were roughly in line with analysts’ expectations.
Royal Bank of Scotland analyst Geoffrey Dicks said: “This shows we will still turn to the housing market when we won’t turn to the high street. The housing market has normalised.”
The news on unsecured lending should please BoE governor Mervyn King, who has hit out at the levels personal debt in the Britain.
“It’s borrowing particularly on credit cards or store cards where, for a small number of families, poor families, the amount that they borrow may reach levels which can only give them difficulty in the months and years ahead,” King said in September.
However, King and other Monetary Policy Committee (MPC) hawks will not be pleased that August’s 25 basis point rate cut looks to have stimulated the British housing market. Inflation is still 2.5 per cent, well above the Bank’s target. King has repeatedly indicated that he will not vote for further rate cuts until inflation comes down.
The GfK consumer confidence survey also out yesterday indicates that consumers are more gloomy about the economy than at any time in the last two and a half years. Consumers are particularly unlikely to make major purchases, often paid for with credit.