The Bank of England said that consumer lending increased by 1.162 billion pounds in June after rising by 1.494 billion pounds in May (revised from 1.513 billion pounds). Economists had expected an increase by 1.25 billion pounds. Net borrowing through credit cards fell to 0.5 billion pounds from 0.6 billion pounds in May, while net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) decreased to 0.7 billion pounds from 0.9 billion pounds. The annual growth rate for all consumer credit was 8.0% in June (the slowest since August 2023), down from 8.4% in May.
Meanwhile, the net mortgage approvals fell to 59,980 (the lowest number since January) from 60,130 in May (revised from 59,990). Economists had expected a decrease to 60,000. Approvals for remortgaging (which only capture remortgaging with a different lender) decreased to 27,500 in June, from 29,300 in May. The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages increased by 3 basis points, to 4.82% in June. The rate on the outstanding stock of mortgages rose to 3.65% from 3.61% in May.
The report also showed that UK non-financial businesses borrowed, on net, 1.9 billion pounds of bank and building society loans (including overdrafts), compared to 0.1 billion pounds in May. Within this measure, net borrowing by large non-financial businesses increased to 2.7 billion pounds from 1.0 billion pounds in May. Net repayments by small and medium-sized non-financial businesses (SMEs) were unchanged between May and June, at 0.8 billion pounds.