"More new mortgages and a net rise in borrowing reflected a stronger mortgage market in November. With approvals up a third on a year earlier, lending will continue to be strong in the months ahead."
- David Dooks, BBA statistics director
U.K. mortgage approvals surged more than expected in November to the highest level in almost six years, indicating the property market continued to strengthen. The number of secured loans approved for house purchases rose to 70,758, up from 68,029 in October, the Bank of England said Friday. A separate report showed that house prices increased 1.4% in December, ending the best year for the property market since 2006, according to Nationwide Building Society. With increasing housing demand, the central bank said in November that it will end incentives for mortgages in the Funding for Lending credit-boosting scheme and focus the initiative on corporate loans.
Meanwhile, business activity in U.K.'s construction sector declined somewhat in December to 62.1 from 62.6 a month earlier. Nevertheless, Britain's construction sector ended 2013 with robust gains, supported by strengthening property market and rising business confidence as the recovery of the U.K.'s economy is gathering momentum. However, despite signs of robust strengthening of the nation's economy and increasing house prices, U.K.'s top economist believe that interest rates in the U.K. are unlikely to rise in 2014. Thus, it is expected that the rates will remain 0.5% at the end of 2014, and the first hike will take place only in the second half of 2015
© Dukascopy Bank SA