UK Consumer Lending Highest in Eight Years

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The FINANCIAL — Lending to British households rose in August to its highest monthly total in more than seven years, a sign that easier credit may help drive economic growth for the rest of the year, according to Nasdaq.

Lending to consumers, net of repayments, was 4.3 billion pounds ($5.83 billion) in August, up from GBP4 billion a month earlier and the highest monthly total since May 2008, according to Bank of England data released on September 29.

The increase in lending was driven by home loans: Banks lent a net GBP3.4 billion to homebuyers in August, also the largest monthly advance since May 2008. Unsecured borrowing rose by a net GBP860 million.

The pickup in lending suggests a buoyant housing market will help keep the economy growing this year. The number of new mortgages approved but not yet extended in August was 71,030, the highest in a year.

BOE officials have in the past kept a wary eye on the housing market for signs that rising prices may push borrowers to take on larger debts than they can easily afford. In its most recent assessment of the risks to the financial stability of the U.K., the housing market was judged an area of possible concern but not an immediate threat.

Business lending also rose in August, a healthy sign for business investment. Businesses borrowed a net GBP2 billion in July, up from just GBP749 million in July.


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