UK consumers binge on borrowing after BoE rate cut

London - UK consumer credit is rising at the fastest pace in a decade and the Bank of England’s interest-rate cut is fueling borrowing, according to the British Bankers Association.

Its monthly report showed credit surged an annual 6.7% in September, up from 5.3% a year earlier and the biggest increase since December 2006. Credit card borrowing was up 6.1%, while short-term loans and overdrafts rose 7.2%, the most since 2013.

“Consumers are increasingly using short-term borrowing to take advantage of record low interest rates,” said Rebecca Harding, BBA chief economist.

“This trend has accelerated since the Bank of England cut rates in August.”

The demand for short-term credit is in contrast to secured borrowing.

The BBA figures show approvals for home loans fell 15% in September compared with a year earlier and are down 3% this year. Harding said the property market “continues to show signs of underlying weakness.”

The Centre for Economics and Business Research said on Wednesday that Brexit will hurt UK housing.

It forecasts that price growth will slow to 2.6% next year from an expected 6.9% in 2016. In London, values may drop 5.6% in 2017, it said.

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