The Bank of England said that consumer lending increased by 1.597 billion pounds in January after rising by 0.786 billion pounds in December (revised from 0.493 billion pounds). Economists had expected an increase in lending by only 0.8 billion pounds. It adds to evidence of resilient confidence amid signs that inflation has peaked and job losses will be limited. The additional consumer credit borrowing was split between 1.1 billion pounds on credit cards (+0.9 billion pounds compared to December) and 0.5 billion pounds through other forms of consumer credit, such as car dealership finance and personal loans.
Meanwhile, the number of approved mortgages for the purchase of a home fell to 39,637 from 40,540 in December (revised from 35,612), reaching the lowest level since January 2009 (excluding the pandemic period) and recording the fifth monthly decline in a row. Economists had expected a decline to 38,000. Approvals for remortgaging, which only capture remortgaging with a different lender, dropped to 25,400, reaching the lowest level since July 2022.
The Bank of England data came shortly after Nationwide Building Society today reported the sixth monthly decline in house prices in a row, with the average cost of a house now lower than it was a year earlier. The market has been hit by a living standards crisis made worse by a sharp rise in interest rates.