Consumer borrowing shows signs of slowdown
GROWTH in consumers’ nonmortgage borrowing has seen a slowdown in recent months, according to a high-street banking report.
Trade body UK Finance said consumer borrowing grew by 1.5% annually in August, down from 1.9% in July. The figures include borrowing on credit cards, personal loans and overdrafts.
Meanwhile, there was 2.2% annual growth in personal deposits flowing into people’s bank accounts. The figures show that non-financial companies’ deposits are growing annually by 8.7% as businesses hold cashflow amid the uncertain economy.
UK Finance’s senior economist Mohammad Jamei said: “Despite resilience in consumer spending, annual growth in consumer credit has been slowing over the last few months. Across the UK, some households have opted to save a little less, whilst others have not increased their borrowing.
“Meanwhile, there has been growth in business deposits as non-financial companies hold cashflow and reserves amidst broader uncertainty in their trading conditions.”
Looking at mortgage approvals, house purchase approvals by high-street banks reached 41,807 in August. This was stronger than the monthly average of 41,133 over the past six months and 11% higher than the same time last year, when the market was subdued following the EU referendum result, UK Finance said.
Mr Jamei continued: “Housing market activity is in Goldilocks territory, growing only modestly since the start of the year, though the mix of activity has shifted towards first-time buyers, away from buy-to-let and cash.
“There is also some rebalancing across regions, as activity picks up in the North of England, Wales and Scotland, away from London, the South-East and East Anglia.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “First-time buyers continue to drive the housing market, which is encouraging as they are important to its overall health.
“Investors continue to be cautious, with buy-to-let more muted than in the past, but this is leading to more balance between residential and investment transactions.”