The Bank of England (BoE) has revealed figures that indicate a strong rate of approvals for mortgages at the back end of 2005. 122,000 mortgages were approved in December 2005, which was up over 25 per cent on mortgage approvals for the same period in 2004. The BoE figures come at the same time as a statement from the Nationwide indicating a rise in house price inflation throughout January. The mortgage market going into 2006 is very active, with numerous new fixed-rate mortgage and flexible mortgage deals being introduced by lenders and financial services providers.
Generally, the mortgage market is perceived as extremely strong by experts, and a rise in mortgage approvals is generally seen as being indicative of a boost in the housing market. Experts believe that the August cut in interest rates by the BoE shored up the housing market in the back half of 2005. Although mortgage approval levels are high, they are still nowhere near the peak of mortgage activity witnessed at the end of 2003.
Experts also warned that the strength of the housing market meant that a base rate cut in early 2006 became more unlikely. In contrast to the strong mortgage market, credit card debt grew very little in December. Unsecured debt rose slightly due to personal loans and overdrafts. Experts say that consumer debt is slowing down.
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Credit down, mortgages up Thu, 02 Feb 2006
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