Mortgage lending 'crept up' in December

Mortgage lending increased slightly in December with the first rise in the number of loans approved since May, according to figures published today from the Bank of England.

Economists said the figures showed the property market was stabilising, and while it was not likely to be the beginning of a big revival, it was certainly diminishing fears of a crash.

Net mortgage lending rose ?7.1bn in December, but the annual growth rate for lending against property slowed to 13%, the slowest annual rate since October 2002.

The number of loans approved for house purchase - those loans agreed by lenders but not yet made - rose to 83,000, seasonally-adjusted, from 77,000 in November, the lowest for almost a decade.

The figures also showed that consumer credit - borrowing on credit cards and unsecured loans - rose by ?1.5bn last month, more than the ?1.4bn expected and above the ?1.4bn in the previous month.

Philip Shaw, economist at Investec, said: "All the main indicators show that mortgage activity rebounded in December, a signal that the market is probably stabilising."

Changes to mortgage regulation had artificially depressed figures in November, which obviously flattered those in December, he said.

"But the market does seem to have found a bottom, and while this is not the beginning of a big revival, it suggests things are stabilising and are not heading towards a crash."

Howard Archer, chief economist at investment firm Global Insight, said: "The modest rise in mortgage approvals and lending in December reinforces the impression that the housing market is currently slowing steadily rather than sharply.

"Nevertheless, mortgage approvals are still very low, and point to further house price softness over the next few months at least.

"The data support the belief that interest rates are set to remain unchanged for some time to come," he added.