UK mortgage approvals rise for 11th straight month

LONDON: Britain's battered mortgage market is slowly recovering but consumer lending remains low as banks and building societies are still reluctant to hand out overdrafts and loans, according to figures released on Monday.

Bank of England data showed the number of mortgage approvals rose in October for the 11th month in a row, with the number of mortgages for house purchases rising to 57,345.

Net mortgage lending rose by 922 million pounds ($1.5 billion) in October, compared with 898 million pounds in the previous month.

Brian Murphy, head of lending at the independent mortgage broker the Mortgage Advice Bureau, said confidence is slowly returning to the property market.

``Mortgage activity around the UK has picked up steadily since August, albeit, of course, at low levels historically,'' he said in a statement. ``There is certainly an element of seasonality involved in the autumn figures although that should not detract from a clear shift in the mentality of lenders and borrowers alike.''

The Bank of England figures also show consumers continued to repay outstanding loans, credit card debts and overdrafts. They repaid a record 579 million pounds during October, the biggest contraction of unsecured lending since the Bank of England began keeping records like this in 1993.

``The record, and fourth, successive net repayment in consumer credit in October is clearly the consequence of many consumers' desire to reduce their debt, low demand for credit and a lack of availability of unsecured credit from banks,'' said Howard Archer, chief UK and European Economist at IHS Global Insight.

The Building Societies Association (BSA) also released figures Monday showing that customers are drawing more heavily on their savings consumers withdrew 1.24 billion pounds more than they paid into building society accounts, the eighth month in a row that this has happened.

The association's director-general, Adrian Coles, said low interest rates were deterring potential savers, and that building societies could not offer attractive rates.

``There is little incentive for people to increase savings whilst the bank rate remains at its current low level, and many may opt to repay debt instead, `` he said ``Building societies and other deposit-takers are also facing heightened competition from institutions with a government guarantee, which is creating further distortions in the savings market.''

BSA figures also showed that consumers are focused on repaying their mortgages building society mortgage customers repaid 521 million pounds more than the sector lent out during October, the 10th consecutive month during which mortgage lending has contracted.