Consumer credit cools while mortgage approvals hit 9-month high
GROWTH in consumer credit slowed in October, while mortgage approvals hit a nine-month high, according to new Bank of England data.
The net amount of new consumer borrowing, excluding mortgages, came in at £0.9bn in October. This equated to a 7.5 per cent annual growth rate, down from 7.9 per cent the previous month and its weakest growth since May 2015.
Conversely, the number of mortgages approved for house purchase rose to 67,000 in October, the highest figure since January 2018.
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Mortgage lending came in at £4.1bn in October, which was broadly in line with September but a little higher than early 2018, the Bank said.
The Bank of England has been trying to cool the consumer credit market, due to concerns that individuals are getting into dangerously high levels of debt. Brexit-induced uncertainty has helped its efforts to encourage consumers to rein in their borrowing.
George Robbins, director of financial services at TransUnion, predicted that the consumer credit market is likely to increase as we head towards Christmas.
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“With UK Finance revealing that more consumers than ever are using their credit cards for everyday spending, rather than just one-off purchases, the Christmas rush is going to be a test of good lending practices,” he said.
“Credit providers should be using all the tools at their disposal to ensure lending is responsible and that consumers aren’t overburdening themselves.”
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He also heralded the relatively buoyant mortgage market.
“This is heartening as it suggests that the looming uncertainty of Brexit isn’t deterring buyers from stepping onto, or up, the property ladder, but again it’s essential that mortgage providers are confident that these buyers have been sufficiently stress-tested and can evidence affordability both now, and in the future,” he added.
