Consumer borrowing grows by 6.7%

The British Banking Association’s (BBA) latest high street banking data shows that consumer borrowing through overdrafts, loans and credit cards grew at an annual rate of 6.7%. Other findings include:

• Gross mortgage borrowing totalled £13.8 billion in January, 6.3% higher than the same period last year
• Re-mortgaging approvals in January were 15.7% higher than January 2016, driven by historically low interest rates
• Net mortgage borrowing was 2.4% last month, higher than in January 2016

Eric Leenders, BBA Managing Director for Retail Banking said “The new year saw homeowners make the most of historically low interest rates by taking advantage of competitive re-mortgage offers. Nearly 29, 000 of these deals were approved last month – 16% higher than January last year.”

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Annual borrowing growth rates

Household borrowing

Gross mortgage borrowing of £13.8bn in the month was 6.3% higher than in January 2016.

Net mortgage borrowing was 2.4% higher in January than a year ago.

Consumer credit annual growth rose in January to 6.7% despite weaker retail sales. Growth continues to be primarily driven by personal loans as credit card growth slowed for the third consecutive month.

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Number of approvals

Mortgage approvals

House purchase approval numbers of 44,657 were 2.5% lower than in January 2016 but 2.5% higher than December and above the 2016 monthly average of 41,320.

Remortgaging approvals of 28,862 in January were 15.7% higher than those in January 2016 and though lower than December’s approval numbers they are still above the 2016 average of 25,987.

Other advances were 15% higher than a year ago and the highest since January 2014.

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Business borrowing annual growth rates

Borrowing by non-financial companies increased by £3.4bn in January however the borrowing was largely short term and will probably unwind next month. The annual growth rate was 2.1% in January, slightly down on previous months.

Net capital market issues in January 2017 were £1.0bn (net) compared to £17.2bn (net) for the whole of 2016.

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Trends in net deposits

Deposits

Personal deposits annual growth slowed slightly in January to 4%.

Non-financial companies deposits grew at an average annual rate of over 8% in 2015 but fell back in 2016 to an average annual rate of 5% and are currently growing at an annual rate of 3%.