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The number of residential mortgages approved by high street banks in the UK rose to its highest level in almost a year in January, as lower interest rates and government subsidies support would-be homeowners despite worries about the wider economy.

Figures released by the British Banking Authority on Friday showed 44,657 new mortgages were approved last month, the most since February 2016. Economists had expected a fall to around 42,600.

The BBA added that approvals in December were slightly higher than previously estimated.

Borrowing through credit cards, loans and overdrafts also continued to grow at a strong pace, despite earlier warnings of a potential slowdown. Borrowing grew at an annual rate of 6.7 per cent in January, rising after a dip in December to return close to the 10-year high of 7 per cent hit in November.

However, the growth was driven mainly by personal loans, with credit card growth slowing for a third consecutive month.

Eric Leenders, BBA managing director for retail banking, said:

The new year saw homeowners make the most of historically low interest rated by taking advantage of competitive remortgage offers. Nearly 29,000 of these deals were approved last month – 16 per cent higher than January last year.

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