UK Consumer Borrowing Reaches Fastest Growth Since 2018

UK households continued to borrow at a strong pace in June, with consumer credit growing at its fastest annual rate since July 2018, according to new figures from the Bank of England.

Annual consumer credit growth increased to 9.1%, while households borrowed a net £1.807 billion through products such as credit cards, personal loans and overdrafts during the month. The increase was stronger than economists had expected.

The housing market also showed signs of continued activity. Net mortgage lending rose to £7.7 billion, while the number of mortgage approvals for house purchases increased to 58,200 in June. Although approvals remain below long-term averages, the figures suggest housing activity has continued despite higher borrowing costs.

The Bank of England said mortgage approvals rose for the second consecutive month, while consumer borrowing remained resilient. Reuters noted that stronger retail spending, supported by unusually warm weather and the men's FIFA World Cup, may have encouraged some households to borrow or draw on savings to fund purchases.

For households, the figures suggest many consumers are continuing to spend despite higher interest rates. While borrowing can help manage short-term expenses, higher interest rates mean debt is generally more expensive to repay than it was a few years ago.

The data comes ahead of the Bank of England's interest rate decision later this week. Financial markets expect policymakers to leave Bank Rate at 3.75%, although that decision will depend on the Bank's assessment of inflation and the wider economy.