MortgagesMortgage approvals to home buyers have risen to their highest level in almost a year, in a further sign that Government efforts to boost lending are working.

Some 55,785 loans were approved for house purchase in December, marking the highest figure since January last year, Bank of England figures showed.


Credit card lending increased by £232 million in December, while lending on personal loans and overdrafts increased by £417 million.

Both of these figures are the highest since September and analysts said they suggest many households turned to these types of credit to stretch their finances over Christmas.

The Government launched a multibillion-pound scheme in August to boost lending to households and businesses by giving lenders access to cheap finance. The number of mortgages on the market has since increased and lenders have been slashing mortgage rates.

Lenders have also reported a recent uplift in lending to the first-time buyer sector.

Estate agents and lenders have said they expect sales to pick up this year as a result of the improvements, although predictions about the direction of house prices have been more mixed.

Howard Archer, chief European and UK economist for IHS Global Insight, said consumers' appetite to take on new borrowing still appears to be weak, despite the increase in consumer credit in December, which includes credit cards, personal loans and overdrafts.

Overall, consumer credit increased by £649 million in December, above the average over the last six months but still well below longer-term levels.

Dr Archer said: "To put this into perspective, December's increase compares with an average monthly increase of £863 million since 1993. The impression remains that consumer appetite for taking on new borrowing is limited while there is also an ongoing strong desire of many consumers to reduce their debt."