More mortgages, declining debts

October saw Britons take out more mortgages, but reduce the amount of debt they held in unsecured loans and advances.

Figures out today from the Bank of England show that last month, 113,000 mortgages worth some £7.634 billion were taken out for house purchases.

This is the highest number of mortgages taken out in a month since June 2004 - when the property boom was at its peak.

Exceeding market expectations, this data has added to increasing evidence that the property market is stabilising following a rocky few months.

But at the same time, overall lending to individuals weakened, to 10.2 per cent annual growth from 10.3 per cent in September.

"All in all, the UK still prefers borrowing for houses rather than for consumption," said Jonathan Said, economist at the centre for economic and business research (cebr).

"This reflects the recent improvement in the housing market. We expect this pick up to continue, although the risk of interest rates remaining at 4.5 per cent through the start of 2006 will help keep house price growth low."

Howard Archer, chief UK economist at the Global Insight consultancy also doubted that the property market was set to boom again.

He commented: "Not only is mortgage activity still well below recent past peak levels, but most affordability ratios are still stretched and will become more so if house prices start moving back up markedly."

Nationwide and Hometrack have already reported on the market in November, appearing to bear out this prediction.

Both surveys of the property market show flat prices for the month, rather than the start of a new boom.