British consumer credit rose more than expected in January to notch up a near-record monthly rise, and mortgage lending also picked up.
The Bank of England said today that consumer credit rose £2.293 billion sterling in January, more than the £1.6 billion increase economists had expected and just shy of the record £2.304 billion monthly gain of last June.
That sudden rise comes despite five interest rate hikes between November 2003 and last August that brought base rates to 4.75 per cent. Expectations remain high that borrowing costs may have to climb further later this year.
The BoE said the number of loans approved for house purchases fell modestly to 79,000 from a revised 82,000, suggesting that demand for housing may be stabilising - although approvals remain only slightly above a near-decade low struck in November.
Still, that was a smaller drop than some economists had predicted after the British Bankers' Association reported a plunge in approvals last week.
Economists generally agree approvals are a good leading indicator of the housing market six months out. Mortgage lending rose £7.2 billion in January, more than the £6.9 billion gain in the prior month, although the annual rate of growth slowed to 12.6 per cent, its weakest since September 2002.
Total lending rose £9.5 billion in January compared with £8.5 billion in December.