Mortgage approvals on a high

The number of mortgage approvals for new house purchases has defied expectations. Figures for approvals have risen to their highest point in almost two years. Economists however, warn of mortgage deals becoming more restricted as banks move to tighten lending conditions.

Bank of England data showed that 52,854 mortgages were approved in November 2011, which is the largest number since December 2009. There are however fears that the figures mask the fact that housing market activity remains weak compared to long term lows. Belief that the labour market is on course to deteriorate in 2012, coupled with the eurozone crisis, makes it seems likely the housing market will remain pretty weak. 2012 will be about matching willing borrowers with an appropriate mortgage provider.

Howard Archer, chief European and UK economist at IHS Global Insight, providers of analysis of the business conditions and economic prospects in over 200 countries, said that, despite rising modestly in November, unsecured consumer credit remains "extremely low" compared with past levels." He added that "The overriding impression remains that consumer appetite for new borrowing is very low while there is also a strong desire of many consumers to reduce their debt."

The Building Societies Association (BSA) reported that mortgage lending by building societies and other mutuals increased to a new high, showing "resilience" in the face of tough economic conditions. Gross mortgage lending by these lenders rose by nearly a quarter in November 2011 to £2.5 billion, which is the highest level since the BSA started reporting figures in this way in January