Mortgage approvals in the UK picked up in November as lenders cut rates, while credit card borrowing doubled to £1bn ($1.27bn).
Net mortgage approvals for house purchases rose to 50,100 in November from 47,900 in October, according to figures from the Bank of England.
This is the highest since June, beating economists’ predictions of an increase to 48,800. Approvals of remortgaging increased to 27,000 from 24,000.
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages rose by 9 basis points (bps) to 5.34% in November.
However, the annual growth rate for net mortgage lending reached 0.3% in November, the lowest since records started in March 1994.
Read more: UK house buying activity drops almost a third in a year as interest rates bite
It comes as lenders have been cutting mortgage rates in a battle to win customers amid expectations that the Bank of England will begin cutting borrowing costs this year.
Emily Williams, director of research at Savills, said: “Buyers who do not have to move are continuing to hold off while the cost of debt remains high.
“Looking ahead, there are encouraging signs for mortgaged buyers. Two and five year swap rates have fallen significantly in the last month, following December’s encouraging inflation figures.
“Several lenders have already cut rates on mortgage products this week as a result, with two-year fixes now available at rates below 5%.
HSBC’s two-year fixed rate for remortgages has dipped below 4.50% for the first time since early June last year, with the headline rate hitting 4.49%, for those with a 40% deposit.
For those looking to fix longer term, HSBC is now offering a 10-year fixed rate deal starting from at 3.99%.
Britain’s largest mortgage lender, Halifax, cut the price of its two-year fixed-rate remortgage from 5.64% to 4.81% on Tuesday.
Leeds Building Society has made rate reductions across its mortgage range for both first-time buyers and those looking to renew their mortgage.
Read more: UK food price inflation falls at record pace
The revised mortgage products include a 2-year fixed rate up to 75% loan-to-value (LTV) at 4.60%, and a 2-year fixed rate up to 95% LTV at 5.59%.
The UK’s average two-year fixed mortgage rate was 5.92% on Wednesday, down from 5.93% the day before, according to figures from Moneyfacts. It said the average five-year rate also dipped to 5.53%.
The Bank of England figures also showed that net consumer credit borrowing rose to £2bn in November from £1.4bn in October, as people borrowed more on credit cards, with that borrowing doubling to £1bn.
Watch: HSBC latest lender to cut mortgage rates as experts predict ‘others bound to follow suit’
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