UK mortgage approvals bounce back from four-year low in January

There were 40,117 approvals for house purchase in the month, following the slump to just 36,085 in December

UK Finance attributes the 11 per cent jump to people taking advantage of deals at the end of last year (Getty)

The number of mortgage approvals for UK homebuyers recovered from a four-year low in January, according to the latest data from UK Finance.

The body, which collects data from British high street banks, reported that there were 40,117 approvals for house purchase in the month, following the slump to just 36,085 in December – the lowest since April 2013.

UK Finance said this 11 per cent monthly jump reflected people taking advantage of mortgage deals on offer at the end of last year.

The data is likely to settle nerves about the sustainability of the housing market by presenting December’s decline as a blip rather than a trend, possibly reflecting a knee-jerk response from buyers to the Bank of England’s first interest rate rise in a decade in November.

January bounce back

But some analysts said its outlook was still weak, pointing to falls in new buyer enquiries reported by surveyors.

The Royal Institution of Chartered Surveyors reported that the net balance for such enquiries in January was -11 per cent, the tenth month in a row that the reading has been negative.

“We’re reluctant to conclude that January’s bounce back in mortgage approvals means its back to business as usual for the housing market,” said Samuel Tombs of Pantheon.

UK Finance also said that consumer credit fell by 0.2 per cent year-on-year in January, while outstanding credit card debt grew by just £4m over the month, down from growth of £86m in December.

“Higher levels of repayments on credit cards ... is expected at this time of year, as customers pay off their festive spending,” said Eric Leenders of UK Finance.

But the news of a cooling will nevertheless hearten the Bank of England, where regulators have been seeking to dampen unsecured consumer credit growth over the past year amid fears of a lending bubble.