Mortgage lending took off in January, the Bank of England confirmed yesterday in figures that boosted expectations its Monetary Policy Committee would continue to resist calls for a cut in interest rates.
Mortgage lending rose by £9.16bn in January, a larger-than-expected rise and the biggest since April 2004, when house prices were growing at double-digit percentage rates. Approvals for home loans - those agreed but not yet made - were 122,000, matching December's 18-month high. They are seen as a guide to house prices six months out.
Separate figures showed the price of goods made in the UK rose at the sharpest pace for a year as manufacturers passed on the impact of their soaring cost bill. George Buckley, at Deutsche Bank, said: "The data points to interest rates on hold, at least in the near term."
The pound hit a three-week high against the dollar as traders pulled back from bets that the Bank of England was poised to cut rates after a slew of downbeat consumer data on Tuesday.
Charles Bean, the Bank's chief economist, said a housing market recovery could boost consumer spending. "That could then pose an upside risk to inflation," he told the Leicester Mercury. "Any pick-up in the housing market is something that will underline consumer spending going forward."
Activity at UK factories slowed while their costs and prices soared to their highest levels for a year last month, according to a lacklustre survey that contrasted with an upbeat performance in the eurozone.
A snapshot survey of 600 factory managers showed a slowdown in new orders, mainly due to flat export sales, dragged the headline index of activity and output. But City analysts focused on a worrying rise in the prices of goods leaving the factory gates, which they said was a sign that manufacturers were determined to pass on the impact of their soaring cost bill.
Prices charged hit their highest level for a year, while the input costs saw a sharp acceleration in manufacturers' costs to a 13-month high.
Geoffrey Dicks, at Royal Bank of Scotland, said: "The survey shows the wrong mix - with activity indicators rising at a modest rate while the inflation readings are at their highest for a year."
The Chartered Institute of Purchasing and Supply said its headline index of activity slipped to 51.7 last month from January's 51.8, below forecasts of a reading of 52 on a scale where a number more than 50 denotes growth.
An equivalent survey of eurozone manufacturing showed the sector growing at its fastest pace in 19 months.Reuse content