UK consumers more cautious about borrowing in run-up to Brexit deadline - BoE

UK consumers more cautious about borrowing in run-up to Brexit deadline - BoE
FILE PHOTO: Customers shop for fruit and vegetables inside a supermarket in London, Britain August 7, 2019. REUTERS/Henry Nicholls/File Photo -
Henry Nicholls(Reuters)
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London, Reuters – British consumers showed further signs of caution as their borrowing increased at the slowest pace in more than five years in September ahead of a Brexit deadline which has since been postponed, data showed.

The growth rate in unsecured consumer lending slowed to 6.0% in the 12 months to September, the weakest increase since July 2014 and down from 6.1% in August, the figures from the Bank of England showed.

Consumers, bolstered by low unemployment and rising wages, have helped drive Britain’s economy since the Brexit referendum decision to leave the European Union more than three years ago.

But there have been signs of a turn in the mood of households recently as the prospect of a no-deal Brexit grew with Britain’s parliament deadlocked on how to move ahead.

Earlier on Tuesday, mortgage lender Nationwide said British house prices rose by just 0.4% on the year, the 11th month in a row that annual price growth remained below 1%.

The BoE said the number of mortgages approved for house purchase rose minimally to 65,919 in September, above economists’ forecasts of 65,000 in a Reuters poll.

Net mortgage lending rose by 3.85 billion pounds in September, roughly in line with the Reuters poll forecast.

Consumer lending increased by 0.83 billion pounds, the smallest monthly increase since March, compared with a forecast for a rise of 0.9 billion pounds on the month.

Last week industry body UK Finance said the number of new mortgages approved by British banks hit a six-month low in September while annual growth in consumer credit rose to a 19-month high.

The BoE said it had revised upwards its data for annual growth in consumer credit over the past two-and-a-half years.

(Reporting by William Schomberg and David Milliken)

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