British consumer credit rose at the slowest rate in nearly seven years in December, a month after the Bank of England raised borrowing costs for the first time in four years.
The Bank of England (BoE) said consumer credit rose by only £834 million sterling, the lowest increase since December 2000 and a rate of just 0.5 per cent, the weakest since March 1997.
Analysts had predicted an increase of £1.4 billion. Mortgage lending growth also slowed but still remained relatively buoyant. Lending secured on dwellings rose by £7.28 billion last month, down from £8.6 billion in November. This was the weakest since March last year.
Total lending was up by £8.11 billion, the weakest since June 2002. The figures will provide some comfort to the BoE's Monetary Policy Committee. It raised rates in November off a 48-year low of 3.5 per cent, partly because it was worried that Britons were taking on too much debt with little regard for any future changes in their circumstances.
Deputy Governor Andrew Large has voted for another quarter-point rise at both the MPC's meeting since then, as he thinks the borrowing fever has to cool down.
Most analysts now think the BoE will raise rates next week as other signs mount that the economy is gathering momentum fast.
Lending on credit cards was particularly low, rising by only £135 million, the weakest since January 1997 and perhaps a response to the wave of publicity their very high interest rates have recently received.
Mortgage approvals, loans agreed but not yet made, fell back slightly to 121,000 from November's record 124,000. However, it still remained well above levels seen earlier in 2003, pointing to continued strength in the housing market.