Rise in number of approved mortgage loans

Lending figures showed a sharp rise in the number of mortgage loans approved in the UK in January, confirming that the property market is still in good health.

The number of new home loans climbed to 113,000 in January, the highest level for five months and 7% up on the average in the last quarter of 2001, said the Bank of England.

The value of mortgage loans approved soared to ?16.2bn, an all-time high, as consumers continued to take on high levels of debt after New Year.

The Bank of England said total lending to individuals last month rose by ?6.9bn, just 0.3% down from the record ?7.1bn growth seen in December.

Shoppers put ?8.94bn on their credit cards in January, though repayments meant the overall level of debt on plastic rose by ?529m.

Consumer credit, which includes loans and store cards as well as credit cards, rose by ?1.6bn, down ?500m on December but above November's figure.

John Butler, economist at HSBC, said: "The figures show consumer lending has fallen back slightly from December, but December was special.

"The key is that lending data for mortgages is up, which suggests the risks to house price inflation are on the upside. A few more months of this and (Bank of England governor) Eddie George will begin to lose some sleep."

Sir Edward told a Commons Treasury select committee yesterday that he was relatively relaxed about the strength of the housing market.

On the UK economy, he said: "I don't lie awake at night thinking about it."

But further pressure from the consumer sector could fuel speculation of an early interest rate rise despite the difficulties faced by manufacturers.

Yesterday Britain's biggest building society, Nationwide, showed that house prices were continuing to surge as low interest rates attracted buyers.

Prices rose by 1.6% in February, bringing the annual rate of house inflation up to 14%, it said.

The Bank of England's Monetary Policy Committee slashed interest rates from 6% to 4% last year in a bid to see-off the worldwide economic slowdown.