HSBC loan enquiries strong

People are taking out more loans than they were this time last year despite four increases in the cost of borrowing by the bank of England, HSBC has found.

Borrowing enquiries at the bank in the three months to January were down on the preceding quarter, but higher than the year before.

In January alone loan enquiries were 4.4 per cent above their January 2004 levels.

HSBC UK economist, John Butler said: "Intense price competition in the market is clouding the picture but is clearly supporting borrowing activity.

"Given the right price, demand for finance will respond accordingly.”

The Bank of England raised interest rates five times between the months of November 2003 and August 2004 to a three-year high of 4.75 per cent.

But even these failed to quell the urge to borrow more money.

HSBC believes the growth was driven by demand for new mortgages and mortgage equity withdrawal.

And these figures are good news for house prices.

Dennis Turner, head of HSBC's business economics team, explained: “The consumer's penchant for secured borrowing remains in place and, combined with other evidence such as the pick up in mortgage approvals in December, it is clear that the housing market remains active."

Today Halifax revealed that house prices increased for the second month in a row in January. The average UK house price is now 13.7 per cent higher than it was in January 2004, at £163,748.