U.K. Consumers Scaled Back Borrowing in Month Before BOE Hike

(Bloomberg) -- British consumers pared their borrowing in July as the Bank of England prepared to increase interest rates.

Unsecured credit increased by 817 million pounds ($1 billion), half the pace of the previous month, the BOE said Thursday. The annual pace of growth slowed to 8.5 percent, the least since November 2015.

In a widely anticipated decision, the BOE raised rates on Aug. 2 for only the second time since the financial crisis, and signaled further hikes will be needed in coming years to bring inflation back to target. Credit-card lending and personal loans both slowed sharply from June.

The figures also reinforced a picture of a housing market lacking momentum, with mortgage approvals falling to 64,768 in July, below the 65,000 forecast. The value of mortgage lending grew at the slowest pace in 15 months.

Brexit fears, increased taxes on landlords and stretched affordability are weighing on the market, particularly in London where prices in the least-affordable areas are falling outright.

Business lending posted a better performance, rising 2.7 billion pounds on the month, the most since March.

Non-resident investors sold a net 17.2 billion pounds of U.K. government bonds in July following sales of 1.4 billion pounds in June. The change between the two months was the largest since records began in 1982 and coincided with heightened fears that Britain could crash out of the European Union without a deal.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint

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