Consumer borrowing cools in October, BoE figures show
(ShareCast News) - Consumer borrowing cooled in October after the Bank of England warned banks to tighten lending standards.
Unsecured debt rose by £1.45bn in October, down from £1.48bn in September and £1.8bn in August, BoE figures showed.
The annual rate fell to 9.6% from 9.8% the previous month and 10% in August. October's figure was the lowest for 18 months.
The BoE cited consumer borrowing when it increased interest rates to 0.5% from 0.25% on 2 November. In September the BoE warned banks they risked underestimating bad debts from consumer loans and urged them to tighten loan criteria.
Speaking on the day the latest statistics were released, Jon Cunliffe, the BoE's deputy governor, said growth in unsecured lending was moderating and that he did not think UK households were on a "debt-fuelled binge". But he said the BoE remained watchful.
Howard Archer, chief economic adviser to the EY Item Club, said: "The BoE will be pleased with the slowdown in consumer credit in October and will be looking for a continuation of this trend. There are clear signs that lenders are reining in the amount of unsecured credit available to consumers and also tightening their lending standards."
Archer said economic uncertainty could be making consumers more cautious but that squeezed purchasing power caused by the pound's fall would probably maintain pressure on consumers to borrow.
The BoE figures also showed a slight fall in mortgage approvals for house purchases to 64,575 - the lowest since September 2016. But remortgage approvals rose to 51,593 - the highest since October 2008.
This reinforced Archer's belief that there is "unlikely to be a significant upturn in housing market activity any time soon".
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