UK Finance has released its latest household finance update for October 2018 which has revealed that £11.3 billion of credit card spending in October was 12.1 percent higher than last October. Over the past twelve months, the outstanding level of credit card borrowing grew by 5.7 percent. Whilst personal borrowing through loans and overdrafts grew by 2.3 percent in the year to October.

The figures also show that gross mortgage lending across the residential market in October was £25.5bn, some 5.6percentt higher than last October. The number of mortgages approved by the main high street banks in October was 4.1 per cent lower than last October; although approvals for house purchase were 3.6 per cent higher, remortgage approvals were 13.5 per cent lower and approvals for other secured borrowing were 1.3 per cent lower. Personal deposits in total grew by 0.8 per cent over the past twelve months. Deposits held in instant access accounts were 2.6 per cent higher than last October.

The report says October saw inflation remain at 2.4 per cent, reducing the likelihood of a Bank Rate rise from 0.75 per cent. Consumers remain wary of their day-to-day finances with sentiment falling slightly even with higher employment and real wage growth. The alternative measure of inflation containing owner-occupiers’ housing costs – owning, maintaining and living in one’s own home and Council Tax (CPIH, 2.2 per cent) shows that utility bills have become the largest contributor to the housing component of the index, reflecting lower disposable income.

Commenting on the data, Eric Leenders, Managing Director, Personal Finance at UK Finance, said “Overall mortgage lending grew in October, despite an uncertain economic environment, while house purchase mortgage approvals by the main high street banks were also up on the previous year. However remortgaging activity has softened, following a period of strong growth driven by fixed rate loans reaching maturity and anticipation of August’s base rate rise.

“Households are taking a measured approach to credit, with repayments on credit cards broadly in line with spending.This reflects the growing preference of customers to use their credit cards as a means of payment rather than a borrowing mechanism, making the most of additional consumer protections and value-added benefits.”

In response to the figures Richard Pike, Sales and Marketing Director of Phoebus Software said “Despite the uncertainty lying ahead as Teresa May takes her Brexit deal to parliament, mortgage lending for October was up both month on month and compared to October last year, flying in the face of the expectations of many. There are indications that jitters around Brexit are starting to have an effect, however, with more people taking a ‘wait and see’ approach, so I expect to see lending and particularly house purchases, tail off as we reach the end of the year.”