Borrowing slows across the UK

According to the Bank of England, mortgage lending in the UK is rising at its slowest rate since January 2002. Lending in July increased at a yearly rate of 10.4%. Lending by banks and building societies increased by £6.45bn.

However, figures on mortgage approvals - loans agreed but not yet made - indicate that the property market will be stable in the coming months. Mortgage approvals are generally considered a good indicator of future trends in the housing loans market. In July, mortgage approvals increased to 97,000, regaining the levels of a year ago and similar to the figures of the previous three months.

Separate figures from the Bank of England showed that fresh borrowing by consumers on credit cards, hire purchase agreements and bank loans has also continued to slow down. In July consumer credit increased at an annual rate of only 12.1% - the slowest annual growth rate since June 2001.

The figures indicate that last year’s increases in interest rates have helped to slow both borrowing and spending.