Shoppers rein in Christmas borrowing on credit cards

BORROWING on credit cards grew at its weakest in five years in the Christmas run-up, amid signs of shoppers being cautious after a years-long binge.

Growth slowed sharply in November, with the total only 2.2pc higher than a year earlier, the lowest since 2014, says industry body UK Finance.

The consumer credit boom has been slowing for 12 months, but the sudden drop-off in November adds to worries that consumers reined in spending as political worries mounted ahead of the general election. Overall consumer credit growth – which also includes borrowing on personal loans, overdrafts and car finance – fell to 4pc, the lowest in seven months.

Howard Archer, of the EY Item Club economics group, said the dip ties in with evidence of slower consumer activity and weak confidence. Retail sales data for November suggested the battered sector has endured another gloomy Christmas, as sales fell 0.5pc compared with the previous month.

The UK Finance data suggest the lacklustre property market was jolted by the looming election. The number of mortgages approved by banks rose to a near three-year high, jumping 11pc from November 2018 to almost 44,000.

Industry experts pinned the unexpected flurry of mortgages being approved in November on nerves before the election.

Andrew Montlake, managing director at mortgage broker Coreco, said: “For a lot of British households, November was a classic case of better the devil you know.

“They chose to get their houses in order and secure a mortgage before a potentially disruptive election result.”

The mortgage data for November held up exceptionally well given that the country was in full general election mode, he added.