Positive signs for UK housing market

Positive signs for UK housing market

The number of mortgage approvals made to homebuyers lifted in November, according to new research by the Bank of England.

A total of 70,410 mortgages with a total value of £12.3bn were approved for house purchase in November, marking the highest figure seen since 70,748 approvals were recorded in August.

Meanwhile, consumer credit continued to grow at its strongest levels for almost eight years, prompting concerns about people's reliance on personal loans, overdrafts and credit cards in order to make ends meet.

The Bank's Money and Credit report for November showed the amount of cash being borrowed by consumers in the run-up to Christmas rose by £1.5bn.

This means in November consumers owed a total of £178.2bn on credit cards and loans, and is the largest since February 2008. In October consumer borrowing lifted by £1.2bn.

However, some economists said the uptick in borrowing highlights consumers' improved confidence, and suggests the housing market and consumer spending will continue to power economic growth in the year ahead.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The Bank of England data suggest that housing market activity is still pretty buoyant, although it appears to have levelled off recently.

"It may well be that a shortage of properties on the market is limiting housing market activity."

Archer also pointed out that the rise in unsecured consumer credit in November follows on from data from the Office for National Statistics showing that the household savings ratio dipped to 4.4% in the third quarter of 2015, the equal lowest rate since 1963.

He added: "This will fuel concern that consumers are borrowing more and saving less to finance their spending, which is likely a consequence of relatively high consumer confidence and extended low interest rates."

Peter Tutton, head of policy at StepChange Debt Charity, added: "These figures show another substantial rise in consumer credit.

"Part of this rise this could be due to people shopping online or using credit to spread the cost of Christmas, but if credit balances continue to increase at this rate into the New Year then concerns about a new and possibly unsustainable credit boom will grow."

Shadow chancellor John McDonnell said: "These are worrying figures that suggest this Chancellor has not learnt any of the lessons of the financial crisis, and reveal his cynical plan for the economy.

"In his time at the Treasury, George Osborne has failed to meet his own targets for reducing Government borrowing. And as the Autumn Statement revealed, he is basing his plan for the economy on families going further into debt.

"The Chancellor seems very content for families to be saving less and borrowing more while earnings are still below pre-2008 levels, and the concern is that we may have a debt-fuelled bubble emerging with a Government hoping for it to happen."