Mortgage Lending Surges to Pre-Boom Levels as Housing Market Revives

Strategic Insights -

The UK's housing market showed no signs of slowing down in January, with mortgage lending hitting levels not seen since the pre-boom days in 2004. According to the Bank of England, mortgage lending totaled £9.16 billion in January, surpassing the £4.99 billion recorded in April 2004 when house prices were still rapidly increasing. The surge in mortgage approvals, particularly for home loans, reached an 18-month high of 122,000 applications, suggesting a continued upward trend in the housing market.

Key Takeaways:

  • Mortgage lending in January reached £9.16 billion, the highest level since April 2004, when house prices were still in double-digits.
  • Banks and building societies approved 122,000 mortgage applications for house purchase, the highest number in 18 months.
  • Unsecured consumer lending increased to £1.319 billion in January, with credit card lending jumping to £730 million, the highest level since January last year.
  • The total value of mortgage approvals, including remortgages, decreased slightly to £28.9 billion, but the overall lending to private individuals increased by £10.5 billion in January.
  • The slow growth of the housing market in 2020 has led to an increase in consumer spending, which is expected to boost inflation.
  • The Bank of England's decision to leave the official repo rate unchanged at 4.5 per cent next week is largely due to the robust housing market activity.

Statistics:

  • Mortgage lending in January: £9.16 billion
  • Highest mortgage lending since April 2004: £4.99 billion
  • Mortgage approvals for house purchase: 122,000
  • Unsecured consumer lending: £1.319 billion
  • Credit card lending: £730 million
  • Overall lending to private individuals: £28.9 billion
  • Average monthly increase in overall lending to private individuals: £9.1 billion
  • Largest monthly increase in overall lending to private individuals: £10.5 billion (January 2024)

Sources:

  • "The Guardian" article citing Bank of England data
  • Global Insight report on housing market activity
  • Bank of England statement on inflation and interest rates