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Some good news for the housing market emerged yesterday, as the British Bankers’ Association (BBA) reported ‘exceptionally strong’ demand for funds to remortgage property. That would suggest that the credit crunch may not be affecting those refixing their mortgages quite yet, contrary to some of the more gloomy predictions about their plight.

The BBA said the number of remortgage approvals rose to 79,016, up 17 per cent on December and up 39 per cent year-on-year as a raft of borrowers came off two- and three-year fixed rate deals, albeit usually with a ‘payment shock’ as they moved on to the higher rates now generally charged.

The number of mortgages approved, that is entirely new finance flowing into the property market, was also up on December, although that was by a very low figure. Some 44,288 new mortgages were approved by the major banks in January, higher than expected by analysts. A total of £18bn was advanced to consumers during the month, up from £15.5bn in December, although the figure was down 4.7 per cent on a year earlier.

Nonetheless, the new mortgage approval figures remain among the lowest on record, and down 31.3 per cent on January 2007. There was little in the data to shift the expectation of a stagnant real-estate market in 2008, and the suspicion that first-time buyers are finding it difficult to obtain a mortgage.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said, ‘while first-time buyers may be struggling to find finance to get a foot on the residential ladder, there are increasing opportunities to refinance for those who already own property. This reflects the greater willingness on the part of lenders to pass on base rate cuts to this group of borrowers. It does, however, throw into sharp relief the claim that a weaker housing market will necessarily be good news for first-time buyers.’

There is also evidence of the credit crunch hitting the credit card and unsecured personal loan market. New spending on credit cards fell to £7.3bn last month from £7.4bn in December, and new loans dropped £100m to £2.6bn in January, down 6.5 per cent on a year earlier.

David Dooks, statistics director at the BBA, said, ‘despite strong volumes of retail sales, card transaction volumes were little changed and spending was more than offset by repayments. Overall consumer credit remained subdued.’

As well as banks being less willing to lend, households are less keen to borrow, Mr Dooks explained. ‘The focus on the household budget is stronger, with higher petrol prices and utility bills meaning that people have to be more careful with their expenditure.’

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News from the City has been quite gloomy of late, but there are reasons to be cheerful, especially if you are a shareholder of Lloyds TSB Group. The biggest U.K. provider of personal loans has announced second-half profits increased 10 percent, helped by mortgage lending, asset sales and cost controls.

The bank also gained 4.8 percent in London trading after saying net income in the six months ended Dec. 31 rose to £1.75 billion, or 30.8 pence a share, from £1.59 billion, or 28 pence. The London-based bank also increased the dividend by 5 percent, it said in a statement.

‘Lloyds TSB has proved to be something of a safe harbour amid the global storm,’ said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers. ‘These numbers have not disappointed.’

Lloyds TSB managed to increase pre-tax profit in its consumer bank by 20 percent even as the economy weakened. The bank increased mortgage lending and attracted more deposits, helping to control costs and offset the economies slowdown as consumers try to reduce a record £1.4 trillion of debt. Chief Executive Officer Eric Daniels said Lloyds TSB won’t have a ‘significant’ increase in bad debts in this year’s first half. The bank rose 20.75 pence to 457 pence in London, valuing Lloyds TSB at £26.2 billion. The shares are down 3 percent this year, outperforming the nine-member FTSE All-share Banks index, down 11 percent.

Lloyds TSB took a second-half writedown of £280 million on credit-related assets. That’s a fraction of the charges at larger banks such as Barclays, which wrote down £1.64 billion at its securities unit last year, and Royal Bank of Scotland, which said in December it will record £1.25 billion in net writedowns.

Lloyds TSB will now be able to consider acquisitions in the UK market, where smaller lenders including Bradford and Bingley and Alliance and Leicester have been weakened by writedowns and increased funding costs. Alliance & Leicester rose 6.4 percent to 510 pence in London on speculation of a bid from Lloyds TSB. The Leicester based bank is down 56 percent from a year ago because of funding concerns.

Lloyds TSB had considered a bid for Northern Rock, according to the Government and Northern Rock. However, Lloyds TSB discussed concerns that the government backing for Northern Rock may give it an unfair advantage in pricing its home loans. Lloyds TSB, with one of the largest branch networks in Britain, is less reliant on credit markets than other lenders. Whereas Lloyds TSB uses deposits for almost two-thirds of its funding, Alliance & Leicester and Bradford & Bingley raise about half their funds in capital markets, which have become more expensive than branch-based funds following the credit crunch.

Lloyds TSB’s costs relative to income in the second half fell to 49 percent from 50.8 percent, indicating greater efficiency. On the other hand, the bank shed 4,552 employees last year, or 7 percent of its 58,000 workforce. It will also cut as many as 2,000 jobs this year, Finance Director Helen Weir said at the press conference. This is, however, a small smudge on an excellent performance record.