UK consumer credit gains ground in October

According to the Bank of England, consumer credit rose 8.2% year-on-year, matching September’s nine-and-a-half-year high.

Lending to consumers rose by £1.18bn last month, slightly less than forecast, while mortgage approvals for house purchases grew from 69,012 in September to 69,630 last month, falling slightly short of the 69,900 reading analysts had expected.

Meanwhile, the value of mortgage lending jumped from £3.56bn to £3.63bn, the biggest increase since April 2008 and comfortably ahead of consensus for a £3.45bn.

“Looking ahead, ultra-low interest rates, strong growth in real incomes and easing credit conditions will probably result in continuing growth in mortgage approvals,” said Scott Bowman, UK economist at Capital Economics.

“Bank lending should also continue to provide support for the ongoing recovery in domestic demand.

“That said, we don’t see a return to the pre-crisis ways of a debt-fueled spending boom and there is still little pressure on the MPC to increase interest rates immediately.