Home lending up amid '˜eerie memories of credit binge'

The number of mortgage approvals being made to home buyers reached its highest levels in nearly a year in January, Bank of England figures show.

Some 69,928 loans were approved for house purchase in January, marking the highest figure seen since February 2016.

Meanwhile, non-mortgage lending increased by 10.3% over the previous 12 months, slightly down on a 10.6% annual increase recorded in December.

Consumer credit recorded a net £1.4 billion increase in January, compared with an average £1.6bn increase over the previous six months.

Within the £1.4bn increase, lending using personal loan and overdrafts increased by £1.1bn while credit card lending increased by £339m.

Concerns have been raised recently that some borrowers may be at risk of over-stretching themselves as households are squeezed by rising living costs.

Kay Daniel Neufeld, an economist at the Centre for Economics and Business Research (Cebr) said: “The growth in consumer credit has accelerated at a worryingly high pace over the past six months.

“This growth has been driven by consumers’ appetite to spend throughout much of 2016.

“While strong domestic demand and retail spending growth were welcome pillars of economic growth, especially in the wake of the EU referendum, the increasing indebtedness of UK households and the reliance on cheap credit have evoked eerie memories of the credit binge days before the financial crisis.”

Howard Archer, an economist at IHS Markit, said the underlying slowdown in the growth in consumer credit seen in January suggests consumers are now becoming more cautious about borrowing and spending.