Annual consumer credit growth slowed to 6.6% in December 2018, highlighting the continuation of “relatively weak flows”, according to the Bank of England’s (BoE) Money and Credit – December 2018.

The central bank revealed that the extra amount borrowed by consumers to buy goods and services fell to £0.7bn in December. Of this total amount, credit card borrowing was particularly low at just £0.1bn, compared to an average of £0.3bn since July.

The overall consumer credit monthly flow was slightly below the £0.9bn monthly average since July, and significantly lower than the average between January 2016 and June 2018 of £1.5bn.
When comparing the recent figures to those from December 2017, using non-seasonally adjusted data, the bank found that the recent decline in net consumer credit “reflects” an increase in repayments more than offsetting higher gross borrowing by households.

The statistics revealed that the annual growth rate of consumer credit has been slowing gradually since its peak of 10.9% in November 2016, declining further to 6.6% in December 2018. Within this, the growth rate of credit card lending, which had until recently been fairly stable, fell to 7.1%. The growth rate on other loans and advances, which has been declining since December 2016, fell further to 6.4%.

However, despite consumer credit growth slowing, the figures illustrated that mortgage market activity has been broadly stable since 2016, with this trend continuing in December.

Households borrowed £4.1bn secured against property in December, slightly above the average of the previous six-months. Mortgage approvals for house purchase, which is commonly used as an indicator of future lending, were around 63,800 in December, remaining unchanged from November, but slightly below the 2018 average of approximately 65,200.

Commenting on the statistics, Bluestone mortgages director of sales and marketing Steve Seal said: “It’s no surprise that mortgage lending has remained steady as cautious borrowers wait for decisive news on Brexit. Advisers can help to boost activity in the meantime, though, by explaining which mortgage products are most suitable for their client’s individual circumstances right now – and fixing can provide certainty during this uncertain time.

“Certain borrowers, however, may struggle to access lending more than others, notably those who are self-employed, contractors or freelancers. These workers already make up 16% of the UK workforce, and this figure is only set to grow. It is therefore essential that advisers are working alongside specialist lenders to service this community, since many high-street lenders cannot, or won’t.

“By taking this approach, the market will be able to reassure borrowers that there is a mortgage solution out there for everyone.”

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