Consumer credit falls, but mortgage lending remains steady in November – BoE

The net flow of consumer credit fell to £0.6bn in November, the weakest flow since November 2013, according to new data published by the Bank of England (BoE).

The figure was below the £1.1bn average since July 2018, and within November’s consumer credit total, there was a net repayment of credit cards for the first time since July 2013 – totalling £0.1bn. The Bank revealed net borrowing for other loans and advances had also weakened to £0.7bn.

The BoE suggested these weak flows had indicated the annual growth rate of consumer credit fell to 5.7% in November – compared to 6.1% in October – and it had also fallen by 3.7% since July 2018, when the rate sat at 9.4%.

Elsewhere, the latest data showed that lending in the mortgage market continued to be steady in November – in line with levels seen over the past three years.

Net mortgage borrowing had slightly fallen to £4.1bn, while mortgage approvals for house purchase remained unchanged at 65,000.

Commenting on the BoE data, Andrews Property Group head of financial services, Sam Harhat, said: “The fact that the number of mortgage approvals for home purchase nudged up in November, the month the General Election campaign was in full swing, underlines how many people refused to let politics put their lives on hold.

“We're expecting mortgage approvals to gain even more momentum in the first half of 2020 as a lot of the pent-up demand out there hits the market.

“The return of aspirational buyers, emboldened by the new climate of political certainty, could see mortgage transactions pick up noticeably, especially in the first quarter. The fall in remortgages isn't a cause for concern but merely reflects how many people have already remortgaged onto the exceptionally competitive rates available.

“A combination of much improved consumer sentiment, continued low borrowing rates and a strong jobs market should see a material increase in transactions during 2020.”

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