UK consumer credit grows at fastest rate in almost a decade in November

British lending to consumers expanded at the fastest annual rate in almost a decade in November and banks approved more mortgages than forecast, showing a buoyant mood among households towards the end of 2015. 

PHOTO: AFP

JAN 4, 20165:40 PM

[LONDON] British lending to consumers expanded at the fastest annual rate in almost a decade in November and banks approved more mortgages than forecast, showing a buoyant mood among households towards the end of 2015.

The Bank of England said net lending to consumers in November was up 8.3 per cent compared with a year earlier, the biggest such increase since February 2006 and a growth rate that may raise concern at the Bank about lending standards.

In cash terms, lending was up 1.476 billion pounds compared with the previous month, beating economists' forecasts in a Reuters poll and showing a similar picture to industry figures released before Christmas.

Lenders also granted more home loans than expected, with 70,410 mortgages for house purchase approved, the highest number in three months.

The figures add to signs that Britain's housing market is accelerating after a dip in mid-2014 when tighter rules on mortgage lending took effect, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans.

Last month Britain took another step towards tightening the rules for its booming property rental sector on Thursday when the government set out plans to allow the BoE to curb lending to landlords.

Net mortgage lending, which lags approvals, rose 3.873 billion pounds in November, the BoE said, the biggest monthly increase since April 2008 and exceeding all forecasts.

In the three months to November, net mortgage lending rose at an annualised rate of 3.5 per cent, the fastest rate since June 2008.

Last week mortgage lender Nationwide reported house prices grew much faster than expected in December, and it said it expected them to rise between 3 and 6 per cent in 2016.

Britain's economic recovery is still heavily reliant on spending by households.

The BoE said annual growth in lending to small businesses slowed to 0.6 per cent on the year from its highest in nearly three years in October.

REUTERS