UK credit and lending figures miss forecasts as consumers increase savings
A trio of leading UK consumer lending indicators for December came in much lower than expected on Tuesday, with consumer credit, lending and mortgage approvals falling shy of analysts' forecasts, driven by above-average savings levels.
Net consumer credit borrowing declined to £1.2bn last month, down from £2.1bn in November, as borrowing through credit cards dropped to just £0.3 from £1.0bn. Other forms of credit also decreased, such as car finance and personal loans, slipping to £0.9bn from £1.1bn. Analysts had pencilled in a smaller decline to £1.35bn in December while the average of the previous six months had been £1.6bn.
A net £0.8bn of mortgage debt was repaid last month, compared with a net zero result in November, but gross mortgage lending picked up to £17.1bn from £16.4bn, albeit remaining well below the £19.2bn average over the past year.
Meanwhile, net mortgage approvals for house purchases rose to 50,500 from 49,300 the month before, but undershot the market forecast of 53,000. This also came in under the average of 66,400 seen between 2015 and 2019, as pointed out by analysts at Pantheon Macreconomics.
At the same time, the measure of total liquid assets – households' deposits with banks and building societies as well as flows into National Savings and Investment accounts – increased by £6.0bn, well above the £4.2bn average monthly rate over the past six months.
"Households managed their finances cautiously towards the end of 2023, but they likely will be willing to borrow more this year, now that mortgage rates have fallen and the outlook for growth in real disposable income has improved," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.