Consumers’ reliance on borrowing to stay afloat appears to be easing, after the latest figures from the Bank of England revealed a fall in total lending to individuals in October.
Total lending to individuals (excluding student loans) fell by £0.3 billion last month, compared to the previous six-month average increase of £0.6 billion. However, overall the last twelve months have seen a 0.6% growth rate in total lending.
Consumer credit (excluding student loans) also dipped by £0.5 billion in October compared to the previous six-month average increase of £0.2 billion, with the twelve-month growth rate at 0%.
Falls were also recorded in credit card lending (down £0.1 billion) and other loans and advances (down £0.3 billion).
In contrast, the number of loan approvals for house purchase (52,982) increased in October and was higher than the previous six-month average (48,880).
The number of approvals for remortgaging (29,358) also revealed an upward trend, increasing marginally in October and above the previous six-month average of 27,602.
“Mortgage activity seems to have improved a touch in the past few weeks, partially boosted by the BoE’s Funding for Lending programme,” said Newedge Strategy analyst Annalisa Piazza.
“That said, the level of activity would remain consistent with a relatively sluggish housing market in the coming months.”
However, the number of approvals for other purposes decreased slightly in October (14,981) and remained below the previous six-month average (16,484).
Speaking to the Financial Times Samuel Toombs, UK economist at Capital Economics, argued that figures offered “slightly weaker news” about the economy.
He said: “Even if the supply of credit continues to improve, we expect demand for it to remain weak as households continue to focus on reducing their debts.”