LONDON,(Reuters) - British mortgage lending increased by the greatest amount since 2008 after lenders approved the largest number of mortgages in more than a year and a half, adding to signs Britain's housing market is heating up.
Data from the Bank of England on Tuesday showed both overall and mortgage lending recorded the biggest net increase since May 2008, before the global financial crisis had started to take a significant toll on Britain's economy.
Mortgage approvals for house purchases numbered 71,030 August, beating analysts' expectations and up from 69,010 in July.
The figures suggest Britain's housing market is starting to accelerate again after a temporary dip last year when tighter rules on mortgage lending took effect, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans.
Last week the BoE's Financial Policy Committee said they expected house price inflation to pick up in the coming months and would be closely monitoring Britain's so-called buy-to-let market, dominated by small landlords.
The number of approvals fell throughout most of 2014, cooling house price growth and easing concerns about a bubble in the housing market.
Mortgage approvals have risen in all but two months this year and the pace of price rises has picked up.
Net mortgage lending, which lags approvals, rose 3.449 billion pounds in August, topping all forecasts in a Reuters poll of economists. In the three months to August, net mortgage lending increased at an annualised growth rate of 2.9 percent, the fastest rate since July 2008.
Annualised consumer credit growth has been slowing in recent months and in the three months to August it was down to 7.8 percent, compared with a recent peak of 8.5 percent in May.
Britain's economic upturn is still heavily reliant on spending by households, but the BoE has said that investment is playing an increasing an increasing role and that it is wrong to characterise Britain's recovery as being fuelled by debt.
The BoE said lending to non-financial businesses rose by 2.028 billion pounds, close to the highest level since March's record 2.562 billion pounds.
Lending to small businesses was flat on the year, ending a string of falls seen since the BoE started publishing annual data in April 2012.
