UK Housing indicates further rate increases

British mortgage lending rose strongly again, building society mortgage approvals hit a record high and money supply growth picked up in January, bolstering the case for higher interest rates this year.

‘It seems highly likely that interest rates will rise further still before long,’ said Howard Archer, an economist Global Insight.

The British Bankers’ Association said on Tuesday mortgage lending rose 5.6 billion pounds ($10.94 billion) last month, compared with a downwardly revised 5.7 billion rise in December and similar to the robust average over the previous six months.

‘Mortgage lending continued to be buoyant, as we expected following the high volumes of approvals in the final quarter of last year,’ said David Dooks BBA director of statistics

Furthermore, the Building Societies Association said seasonally adjusted approvals — loans agreed but not yet made — hit a record 5.949 billion pounds last month while net advances amounted to a 1.613 billion, a record for January.

The high level of home loan approvals indicates further strength to come in the housing market despite some surveys showing signs of peaking house price inflation as Britons contend with three interest rate hikes since August.

Once more the British housing market seems to be resilient in the face of anything thrown at it. With Mr Blair likely to step down in a few months will an flawed war and unaffordable housing be his legacy to th people of Britain.