Mortgage approvals rose to their highest level since December 2009 in November, but overall net lending sank to its lowest level since June, Bank of England figures showed on Wednesday.

The data confirm a weak outlook for household spending, and a sharp fall in net mortgage lending shows the housing market remains in the doldrums, despite the small increase in mortgage approvals, which are still half their pre-crisis average.

A separate survey of purchasing managers also showed that growth in Britain's construction sector unexpectedly gained pace in December, providing a rare glimmer of hope that the economy can still avoid recession.



I would describe the move in mortgage approvals as going aggressively sideways, which is what it has been doing for the last six months or so. They are a bit up from their lows but they are going nowhere fast, so housing activity is still relatively muted.

On money supply, the good news is it is still in decent, positive, territory. It has slowed on the month but 3 to 4 percent is much better than it was in the middle of the year when it was much closer to zero.

Consumer credit is broadly in line with the average of last year. Consumer spending is under pressure, so in that environment we are not going to see people willingly taking on more credit for the purpose of spending more in the shops.


It's all in line with long-established trends... The household sector is still up to its eyeballs in debt. It's deleveraging but at a slow pace because it doesn't have the income growth to deleverage any more quickly. So that's going to persist for several years. I don't think anybody expects the household sector to lead any UK recovery.

On construction PMI:

The fact that we've had this steady, persistent improvement suggests we might manage to get some growth out of construction in Q4 and underpin some marginal expansion in GDP.


The over-riding impression remains that consumer appetite for new taking on new borrowing is very low while there is also a strong desire of many consumers to reduce their debt.

Consumer desire to get a tight grip on their finances is clearly the consequence of current heightened concerns over the outlook for the economy and jobs. Meanwhile, there remains limited availability of unsecured credit from banks.

It is possible that the slight pick up in unsecured consumer credit in November could have been influenced by increased 'stressed borrowing' with more people having to borrow to help finance their spending over the Christmas period as a consequence of the extended squeeze on their purchasing power.


Looking at the figures, they are not far off expectations really. I think looking at the releases now it seems to be that the money supply numbers are probably the most disappointing of the lot, which shows a contraction in money supply.

But on the housing side of things, I think it is pretty much the same picture as we have seen over the last year: housing market basically flatlining, with not any particular signs of an improvement in this month's data.


- Highest number of mortgages approved for house purchase since December 2009

- Lowest amount of total net lending since June 2011