Consumer borrowing falls as drivers put brakes on car purchases

The amount of unsecured lending fell sharply in September, as British consumers opted against buying new cars.

Data published on Monday from the Bank of England showed that new consumer borrowing excluding mortgages was £0.8bn in September, down from £1.2bn in August. The growth rate in unsecured lending was 7.7%, down from August’s rate of 8.2% and the slowest growth since August 2015.

In the three months to September, on an annualised basis growth was ahead 5.5%, the weakest since January 2014.

The Bank attributed the decline to weaker net borrowing for other loans and advances, which fell from £0.7bn to £0.3bn. “Within this,” it said, “new borrowing for car finance fell sharply, consistent with very weak car registration numbers in September.”

New car registrations in the UK and across the Eurozone fell sharply in September, traditionally one of the industry’s strongest months because of the introduction of new number plates. The decline was attributed to new emissions tests, which created a bottleneck, though in the UK consumers are also increasingly putting off big ticket purchases until there is more clarity on Brexit.

The Bank also said on Monday that mortgage lending improved in September, up to £3.9bn after “two relatively weak months”. In August consumers borrowed £3.1bn against their homes and £3.3bn in July.

The annual growth rate of mortgage lending was unchanged at 3.2%. The rate has now been around 3% since late 2016. The number of mortgages approved for house purchase was broadly unchanged at 65,000.

The total amount outstanding borrowed by businesses, from banks or through financial markets, fell to £0.8bn.