The BoE said ​62,584 new mortgages for house purchase were approved in February, up from 60,246 in ​January

British lenders last month approved the most mortgages ‌in three months and consumer credit grew at the fastest pace in nearly two years, Bank of England data showed on Monday ahead of a potential hit from higher borrowing costs caused by the Iran war.

The BoE said ​62,584 new mortgages for house purchase were approved in February, up from 60,246 in ​January.

The ⁠value of mortgage lending, which lags behind approvals, rose by the biggest amount since September – up ​£4.840 billion in net terms in February following a rise of £4.2 billion​in January.

The BoE data contrasted with more recent signs of caution in the housing market. The Royal Institution of Chartered Surveyors said demand faded in a survey that covered the start of the war as buyers worried about the ​implications of the Middle East war.

Matt Swannell, chief economic adviser to the EY ITEM Club, said ​that the BoE’s figures reflected an unwinding of weakness in previous months and that a sharp jump in lenders’ ‌financing ⁠costs since the outbreak of the war was set to push up mortgage rates.

The BoE’s measure of net consumer borrowing rose by £1.935 billion in February.

The increase was above January’s £1.828 billion rise, taking the annual rate ​of consumer credit growth ​to 8.5%, its fastest ⁠since March 2024.

The annual growth rate of the M4 money supply excluding non-bank financial institutions – which some economists see as a factor driving medium-term ​inflation – rose to 3.9% in February from 3.6% in January.

But Paul Dales, ​chief UK economist ⁠at Capital Economics, said this still represented a relatively subdued growth rate ahead of the outbreak of the Iran war, suggesting the burst of inflation triggered by higher energy prices is more likely to be ⁠short-lived than ​long-lasting.