Net consumer credit borrowing in the United Kingdom rose to £2.464 billion in August, the largest monthly increase since the Bank of England's series began in 1993. The total exceeded the £1.9 billion median forecast in a Reuters poll. The Bank's rounded release put borrowing at £2.5 billion, up from £2.1 billion in July.
Mortgage approvals moved in the opposite direction, falling to 54,918 from 55,928 in July. That was the lowest level since December 2023 and below the six-month average of about 60,100. Net mortgage borrowing still increased to £4.4 billion from £4.1 billion, remaining below its recent six-month average.
CONSUMER CREDIT ACCELERATES
Credit-card borrowing accounted for £1.2 billion of the August consumer-credit total, up from £0.9 billion in July. Other forms of consumer credit, including car finance and personal loans, rose to £1.3 billion from £1.2 billion. The figures indicate that unsecured borrowing strengthened across more than one channel.
Julie Palmer of Begbies Traynor said the rise suggested households were using credit to pay for essentials.
HOUSING ACTIVITY LOSES MOMENTUM
KPMG UK’s Katie Clinton said a further fall in mortgage approvals pointed to affordability pressures continuing to weigh on housing demand. The effective interest rate on newly drawn mortgages rose to 4.60% in August from 4.45% in July. The August total also remained materially below the recent six-month average.
The United Kingdom's budget is scheduled for 28 October, while the Bank of England's next money-and-credit release is due on 29 October.