UK mortgage lending rose in January

Mortgage lending jumped in January as buyers raced to get ahead of looming interest rate rises – but mortgages for house purchase fell sharply.

Borrowers took out mortgages worth £21.9bn in January, up 9.8 per cent on the same month the year before, according to data from UK Finance.

However, while the number of people remortgaging their properties rose 4.6 per cent to 24,930, the number of loans being taken out for house purchase fell five per cent to 28,721.

Meanwhile, the same figures showed credit card spending had risen 5.8 per cent in January, although UK Finance added higher repayments mean the pace of borrowing stuck at 4.8 per cent.

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Economists cautioned the rise in mortgage lending may be a blip, rather than the beginning of a long-term trend.

“We’re reluctant to conclude that January’s bounce back in mortgage approvals means its back to business as usual for the housing market,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“Mortgage rates have only risen marginally over the last three months – the average five-year fixed-rate was just nine basis points above its September’s low in January – but they likely will rise by about 60bp over the next six months.

“Other indicators also suggest that demand is weakening. New buyer enquiries fell for the tenth consecutive month in January, according to RICS. The number of house hunters on estate agents’ books also was down 20 per cent year-over-year in December, according to the National Association of Estate Agents. Accordingly, the underlying trend in mortgage approvals still is downwards.”

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