U.K. Consumer Borrowing Growth Cools to Weakest in Three Years

(Bloomberg) --

U.K. consumer borrowing posted the weakest growth in three years in August as the Bank of England raised interest rates to the highest since 2009.

Unsecured lending rose 8.1 percent from a year earlier, the least since the same month in 2015, the U.K. central bank said on Monday. It grew 1.1 billion pounds on the month.

The slowdown follows years of rapid expansion in which financial-stability officials have expressed concern about the rapid buildup of debt used to finance cars and other goods. The BOE has nevertheless argued that the risks are confined to just a few areas, and that any future interest-rate hikes will be limited and gradual.

The rate hike in the summer also prompted homeowners to lock in lower borrowing costs. Remortgage approvals gained to 53,125, the most since the previous BOE increase in November.

Borrowing on credit cards grew an annual 8.9 percent in August. Lending including vehicle finance, personal loans and overdrafts rose by 7.7 percent, the least since 2014.

Separate figures showed a pickup in the mortgage market, with home-loan approvals rising to 66,440, the highest since January.

Lending to non-financial firms rose 1.3 percent in August, but remained weak compared to the past two years. Growth in lending to small and medium-sized business remained close to zero for an eighth month.

Non-resident investors bought a net 14.5 billion pounds of gilts, the most since November 2016, after purchases slumped in July.

©2018 Bloomberg L.P.