November sees fall in borrowing

British consumers' borrowing frenzy may have cooled as the level of lending to individuals and the number of mortgages taken out sink, reports out today showed.

According to the Bank of England, lending to individuals rose by just ?7.8bn (0.8%) in November, ?0.6bn weaker than the increase in October.

Secured lending grew by ?6.5bn, (0.8%) in November, ?0.5bn weaker than the growth seen in October.

In total, the value of all loans approved in November, at 19.9bn, was ?1.3bn weaker than in the previous month, and ?2bn weaker than the average growth seen in the three months leading to October.

The number of loans approved for house purchase suggested a continuing slide in the property market. Only 77,000 mortgages were approved for people buying property in November, the lowest level in for almost a decade.

This represented a significant fall compared with the three months leading to October, which saw an average of 89,000 loans.

Commenting on the figures, Simon Rubinsohn, chief economist at investment firm Gerrard, said: "Typically, mortgage approvals have been a fairly reliable lead indicator of house price inflation.

"In view of the latest data, it is hard to escape the probability that property prices are likely to continue to soften in the first quarter of the year."

The Bank said that consumer credit had grown by ?1.4bn (0.8%) in November, ?0.1bn weaker than the increase seen in October and ?0.2bn weaker than the average in the three months leading to October.

Meanwhile, another set of figures published by the Bank today suggested that British homeowners may be feeling uncertain about the cost of borrowing and the state of the property market.

In its mortgage equity withdrawal data, the Bank said that British homeowners withdrew ?12.4bn from the equity built up in their homes, compared with the ?13.9bn withdrawn in the previous quarter, and down significantly from the ?16.5bn seen in fourth quarter of 2003.