The Bank of England said that consumer lending increased by 1.877 billion pounds in January after rising by 1.257 billion pounds in December (revised from 1.197 billion pounds). Economists had expected an increase by 1.6 billion pounds. This was mainly driven by higher borrowing through credit cards (+0.6 billion pounds, to 0.9 billion pounds). Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) increased by 0.1 billion pounds, to 1.0 billion pounds. The annual growth rate for all consumer credit increased, and is now at 8.9% in January.
Meanwhile, the net mortgage approvals rose to 55 227 from 51 506 in December (revised from 50 459). Economists had expected a rise to 52 000. The latest reading was the highest since October 2022. Net approvals for remortgaging remained stable in January, at 30 900. The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 9 basis points, to 5.19%. The rate on the outstanding stock of mortgages increased in January by 5 basis points, to 3.41%.
The report also showed that UK non-financial businesses borrowed, on net, 0.3 billion pounds from banks and building societies (including overdrafts), up from 0.1 billion pounds in December. Within this measure, large non-financial businesses borrowed 0.4 billion pounds, down from a net borrowing of 1.1 billion pounds in December. Net borrowing by small and medium-sized non-financial businesses increased from net repayments of 1.0 billion pounds in December, to net repayments of 0.1 billion pounds in January.