Yahoo Finance UK consumers borrowed an additional £1.1bn last month as cost of living bites
UK consumers borrowed an additional £1.1bn on credit cards or through personal loans last month, slightly below the £1.5bn borrowed in July.
The Bank of England (BoE) revealed that £700m was on credit cards and £400m through other forms of credit, such as personal loans or car finance.
The annual growth for all consumer credit was unchanged at 7.0%, the highest since March 2019, when it was 7.2%. The annual growth rate for credit card borrowing was also unchanged at 12.9%, the highest since October 2005.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that households were saving less and borrowing more, "in an attempt to maintain their real spending amid the surge in CPI inflation".
It comes as the cost of borrowing has jumped this year as Threadneedle Street looks to combat surging inflation which stands near 40-year highs. UK interest rates are currently at 2.25% at the time of writing, after the central bank has raised rates for seven consecutive meetings.
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The BoE also revealed on Friday that mortgage approvals climbed to 74,340 in August, up from 63,740 in the previous month, and exceeding the 73,075 seen in August of last year.
This was the highest level since January as buyers race to take their last chance to lock in cheaper rates.
Individuals’ net borrowing of mortgage debt increased from £5.1bn in July to £6.1bn, however, analysts warned that the spike will not last.
Jonathan Samuels, chief executive of Octane Capital, said: “The latest mortgage approval figures are certainly positive and demonstrate the continued strength of the market in the face of an increasingly uncertain economic backdrop.
“However, they don’t account for the recent turbulence seen within the sector as a result of inflationary pressures and a reduction in product choice, which is sure to dent the number of homebuyers opting to take the plunge in the coming months.”
