Consumer credit slows but mortgage market remains stable - Bank of England
Consumer borrowing grew at its slowest rate for three years in October, data from the Bank of England showed on Thursday.
The annual growth rate of consumer credit was 7.5% in October, which the Bank said was “reflecting the weaker lending flows seen in recent months”. The growth was the lowest since May 2015 and well off a high of 10.9% in November 2016.
The net amount of new consumer borrowing, excluding mortgages, was £0.9bn. Within this, net credit card borrowing was slightly below September’s figure, at £0.4bn, while borrowing through other loans and advances was slightly ahead at £0.5bn.
The mortgage market was “broadly stable” in October, with households borrowing £4.1bn against their homes and the annual growth rate of mortgage lending at 3.3%. The rate had been at around 3% since late 2016, “and remains modest compared to the pre-crisis period”, said the Bank.
Mortgage approvals for house purchases were 67,086, the highest since January, after dipping to 65,726 in September, although they remain well below the long-term average of 81,000.
Remortgaging approvals were unchanged from September at 49,000.
Howard Archer, chief economic advisor to the EY Item Club, said: “October’s consumer credit reinforces the impression that consumers are currently relatively cautious in their borrowing while lenders have certainly become warier about advancing unsecured credit.
“This is welcome news for the Bank of England, given its view that recent rapid growth in consumer credit has created a pocket of risk.”