Consumer credit rose by record £1.59bn in July
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Your support makes all the difference.The slowdown in the housing market has not dented consumers' willingness to spend, figures yesterday show. Consumer credit rose by £1.59bn in July, the largest increase on record and well above independent forecasts.
The slowdown in the housing market has not dented consumers' willingness to spend, figures yesterday show. Consumer credit rose by £1.59bn in July, the largest increase on record and well above independent forecasts.
There was a modest rise in credit-card borrowing, but other loans such as hire-purchase and car loans rose by a record £1.1bn. The Bank of England, which produced the figures, stressed there was no fundamental reason for the surge, which was probably caused by technical factors.
Such a rise would normally increase the odds on a rise in interest rates, but the impact was offset by falls in mortgage lending, new loan approvals and the total value of borrowing.
The Bank of England said mortgage lending rose £2.84bn in July, the lowest since February 1999. New approvals dipped by 8,000 to 93,000 while the value dipped to £8.9bn from £9.7bn.
The Land Registry said house-price inflation in England and Wales slowed to 14.9 per cent in the second quarter from 16.85 per cent in the first.
Geoffrey Dicks, UK economist at Royal Bank of Scotland, said: "The weak mortgage lending and housing figures mitigate any influence the consumer-credit data may have on the Monetary Policy Committee."
David Hillier of Barclays Capital said the figures contained a mixed message. "The slowdown in housing activity has already been made clear," he said. "We should focus on the consumer-credit number, which is undoubtedly bearish for rates.
Deutsche Bank, which produces its own housing index, saw a fall to its lowest since October. Ciaran Barr, chief UK economist, said: "While we do not expect a crash, evidence of the slowdown will be welcomed by the MPC and any further rate rises will be for reasons other than the housing market."
The Bank also revised down its estimate of M4 money supply growth in July to 6.7 per cent on the year from 6.8 per cent, but this is not seen as significant.
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