Rise in mortgage lending reflects consumer confidence

Mortgage lending increased at its fastest rate ever in January, despite a slower housing market, according to the latest figures released today.

The number of mortgage advances totalled ?9.4bn last month, an increase of 53% from last year, said the British Bankers' Association (BBA).

The BBA added that the number of people paying off their mortgages was less than the previous month, which added to a net lending increase of ?4.1bn.

The bulk of the increase was due to people remortgaging to take advantage of low interest rates. Many people are also taking advantage of equity release products, which allow homeowners to borrow back money against the value of their home.

"Annual mortgage lending has been increasing for the last three years, and 2002 looks to be heading the same way," said BBA chief executive Ian Mullen. "This reflects the fact that we are seeing signs of more financially-aware customers who are shopping around for financial products and understanding them more clearly."

Further figures show that nearly 165,000 loans totalling ?9.9bn were approved in January, compared to the previous January. This represented an increase of 31% in loans for house purchase, an increase of 49% for remortgaging and a 37% increase in equity withdrawal loans.

The average house purchase loan has increased bv 12% to of ?79,900.

Lending on credit cards was slower, and showed an increase of only 6% from January 2000 - down on December's year-on-year increase of 14%.