October 1, 2018 / 8:43 AM / 8 months ago

UK consumers slow pace of borrowing growth to near three-year low

FILE PHOTO: Shoppers walk past House of Fraser on Oxford Street in central London, Britain, April 2, 2018. REUTERS/Hannah McKay

LONDON (Reuters) - British consumers increased their borrowing at the slowest pace in nearly three years in August, official data showed on Monday, raising questions about how much help they will provide to the economy as Brexit nears.

However, the Bank of England figures also showed mortgage approvals rose by the most since January.

Consumer credit growth slowed to an annual rate of 8.1 percent in August from 8.5 percent in July, the slowest increase since September 2015.

In month-on-month terms, net consumer lending rose by less than expected to 1.118 billion pounds. That was up from 838 million pounds in July but below the median forecast of an increase of 1.3 billion pounds in a Reuters poll of economists.

British retailers reported strong sales over the summer, boosted by hot weather and the soccer World Cup and helping to soften the effects of uncertainty about Brexit on the overall economy.

The BoE said mortgage approvals for house purchase strengthened to 66,440 from 65,156, above the economists’ forecasts for a fall to 64,500.

The housing market has been sluggish since the 2016 Brexit vote and the BoE’s figures showed the net change in the value of mortgages in August slowed more than expected to 2.904 billion pounds, the weakest in over two years.

Net gilt purchases by foreign investors totalled 14.515 billion pounds, almost reversing net sales of 17.153 billion pounds in July which had been the highest since records began in July 1982. Analysts said the July fall was driven at least in part by a heavy volume of maturing bonds.

Reporting by William Schomberg and Alistair Smout; uk.economics@reuters.com, +44 20 7542 5109

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