Mortgage lending remains at seven-year high
Mortgage lending continued to run at a seven-year high in November in a further sign of the strength of the market, the British Bankers' Association (BBA) has reported.
Meanwhile, non-mortgage lending to consumers saw the biggest jump in eight months, fuelling concerns that the cheap cost of credit is encouraging people to borrow more and save less to finance their spending.
The BBA said gross mortgage borrowing amounted to £12.8 billion last month, marking a 28% increase compared with a year earlier.
In October, gross mortgage borrowing stood at £12.9 billion, and the BBA said the last two months have seen the highest monthly lending totals for seven years.
Richard Woolhouse, chief economist at the BBA, said: "These statistics show the continued strength of the mortgage market, with monthly new lending higher than at any time over the past seven years."
The BBA's figures also show that 44,960 mortgage approvals with a total value of £7.9 billion were made to home buyers in November.
This meant there were 20% more house purchase approvals in November than in the same month last year.
There have been recent signs of people being keen to snap up the cheap rates being offered by mortgage lenders, amid speculation that interest rates could start to rise at some point next year.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "The mortgage market shows no sign of slowing down. It's been a busy year for many brokers as borrowers take advantage of exceptionally low mortgage rates."
He said some lenders have also been keen to lend to meet end-of-year targets.
Meanwhile, net consumer credit borrowing increased by £713 million in November, the biggest upswing in eight months. The figure includes borrowing on credit cards, personal loans and overdrafts.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "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. This is something that the Bank of England needs to keep a close eye on."
The BBA also said that annual growth in lending to non-financial companies, excluding the real estate sector, has turned positive, recording a 0.6% increase.
Mr Woolhouse said: "Net lending to companies is now expanding, particularly in the wholesale and retail sectors, as businesses take advantage of record low interest rates."