Bank of England sees sharp fall in households’ borrowing for car finance

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Consumer credit growth weakened in September amid a sharp fall in new borrowing for car finance, according to the Bank of England.

The Bank’s Money and Credit report said the net amount of new consumer borrowing, excluding mortgages, was £785 million in September, down from £1.2 billion in August.

Explaining factors behind the slowdown, the Bank said: “New borrowing for car finance fell sharply, consistent with very weak car registration numbers in September.”

By contrast, other borrowing, such as that using personal loans and overdrafts, was robust, the Bank said, and credit card borrowing remained in line with recent averages.

Reflecting the weaker flow of lending, annual growth in consumer credit slowed further, with the smallest increase seen in more then three years – since June 2015.

The annual growth rate of consumer credit slowed to 7.7%, well below a peak of 10.9% in November 2016, the Bank of England said.

Meanwhile, looking at mortgage borrowing, the report also showed that 65,269 mortgage approvals were made to home buyers in September, edging down from 66,101 approvals in August.

The number of approvals for re-mortgaging remains close to a recent peak, although it fell back compared with the previous month, with 49,169 approvals recorded in September compared with 52,072 in August, the report said.

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