LONDON (Reuters) – Lending to Britons expanded last month at the fastest annual pace in 11 years and mortgage approvals were stronger than expected, bolstering the picture of resilient consumer demand after June’s Brexit vote.
Consumer credit increased last month by 1.62 billion pounds, up from 1.48 billion pounds in September and taking the annual growth rate to 10.5 percent – the strongest since October 2005, Bank of England data showed on Tuesday.
Mortgage approvals for house purchases increased to 67,518 in October from 63,594 in September. Analysts in a Reuters poll had forecast 65,000 mortgage approvals were made in October.
Britain’s economy has performed much better than most economists had expected in the immediate aftermath of June’s vote to leave the European Union, with households showing few signs of being fazed by the referendum result.
Less comprehensive figures from the British Bankers’ Association also showed consumer lending grew in October at the fastest pace in nearly 10 years.
But a much bigger test awaits in 2017.
Rising inflation caused by the pound’s post-referendum plunge looks set to squeeze household spending and economists said they still expected business investment to slow.
Recent sentiment surveys suggest households are becoming increasingly concerned about inflation following the pound’s post-Brexit vote plunge.
The Bank of England expects consumer price inflation to peak at around 2.75 percent next year – some way above its 2 percent target.
The BoE said business lending increased for a second month in a row, rising 3.15 billion pounds from 1.0 billion in September and marking the largest upturn since February.
Mortgage lending in cash terms increased 3.28 billion pounds, up slightly from September’s 3.26 billion pound rise.
Earlier this month the Royal Institution of Chartered Surveyors said house prices rose in October at the fastest pace since April, adding to tentative signs a recent slowdown in the market is now easing.
(Reporting by Andy Bruce and Adela Suliman)