UK Household Borrowing Shrunk to its Lowest Level

Household borrowing in Britain fell to its lowest level after 5 ½ years in March. On Tuesday, unsecured credits grew by 254 million pounds ($348 million) but the figures were the lowest from November 2012 and below par the 1.5 billion-pound average in the past six months, according to the Bank of England. While mortgage approvals were down to 62,914 which recorded its weakest in 2018. This could possibly be the result of the adverse weather in March that made consumers away from the market and further affected the momentum.

The data published last week presented that UK economy slightly grew in Q1 despite its sluggish performance since 2012. The annual growth of consumer credit weakened by 8.6 percent and also the lowest in November 2015. On the other hand, borrowing increased by less than 10 percent that triggered concerns of  BOE’s financial-stability officials.

The evidence is becoming clear that consumers and lenders started to be more careful since the updated Credit Conditions Survey indicates that the availability of unsecured household credit and demand loans had decreased during the first quarter amid the weak economic background.

The BOE also said that credit by non-financial corporations increased by 4 billion pounds. Mortgage figures strengthened by the housing market strained from Brexit uncertainty, higher interest rates, inflationary squeeze on wages and tax adjustments. The drop mainly affected London considering the annual decline of its values since 2009.

The central bank added that foreign investors sold U.K. government bonds worth 5 billion pounds in March and purchased gilts amounting 11.6 billion pounds in February.