Mortgage approvals reached their highest level in five months in June - but credit card lending increased at its slowest rate for 12 years, official figures showed yesterday.
The Bank of England said mortgage approvals reached 120,000 in June - up 3,000 from May reflecting the strength of the housing market.
Consumer credit rose by £810 million but within that credit card lending rose by just £43 million, the smallest increase since October 1994.
Total net lending to individuals rose £9.8 billion in June - a smaller increase than in May when it increased by £10.5 billion. This represents year-on-year growth of 10.3 per cent.
John Butler, economist at HSBC, said mortgage activity is back to levels seen in 2004 and is consistent with a continued pick-up in house prices. "Interestingly, the rise in secured borrowing is entirely driven by house purchases, with little renewed pick-up in re-mortgaging or equity withdrawal," he said.
"So households seem keen and willing to borrow to purchase an asset but are much less willing to finance consumer spending through debt."
Allan Monks, economist at JP Morgan, said one of the reasons for the divergence is that secured forms of debt are relatively cheap.
"Indeed, a recent poll conducted on behalf of the Bank of England showed that secured borrowing was increasingly being used to pay off other debt obligations," he said. Last month, the Bank revealed that mortgage debt had topped £1 trillion for the first time.
But the housing market may slow down if the bank's Monetary Policy Committee chooses to increase interest rates on Thursday, Ross Walker, economist at the Royal Bank of Scotland, said the data "is largely neutral in terms of MPC's decision".
"Despite the clear moderation in unsecured lending total lending to individuals continues to rise at double-digit rate," he added.
A poll of economists found that only five of 35 actually predicted a rise this week, though most agreed the vote is likely to be close.
Global Insight economist Howard Archer said the strong mortgage lending figures confirm housing market activity "has perked up again".
"This suggests that house prices could spike higher in the near term, after recently showing some signs of losing momentum," he said, adding that this will boost the case for the Bank of England to raise interest rates.
"The more hawkish members of the Monetary Policy Committee may see the current strength of housing market activity as boosting the case for a near-term interest rate hike," he said.
Meanwhile, other loans and advances, such as over-drafts, fell to £0.8 billion from May's £1.1 billion.
Mr Archer said the weak consumer credit numbers suggest that consumer spending will be "generally more moderate" over the coming months after picking up in the second quarter.