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Consumer credit growth maintains brisk pace in September

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The growth rate of consumer credit remained broadly unchanged in September, at close to 10%, according to Bank of England statistics.

The ongoing growth in consumer credit makes an interest rate rise more likely when the Bank of England Monetary Policy Committee meets on 2 November. A recent report by credit rating agency S&P said the current double-digit annual growth rate in UK consumer credit was unsustainable.

Consumer credit has leapt from a growth rate of around 4% in 2014, to its current level. While the current growth rate is a little below its peak, it still gives cause for concern. In particular, as wage growth fails to keep pace with inflation, economists are worried that households are using credit to get by.

At the same time, mortgage approvals for house purchases fell slightly to 66,232 in September, close to their recent average. Remortgaging grew to £8.4bn in 47,598 transactions (up 2.8%) from August and up 6.4% compared to the previous six months average of 44,721 transactions for £7.8bn.

Anderson Harris director Jonathan Harris said mortgage approvals remained close to their recent average: “The resilience of the market is impressive given the uncertainty flying around about the economy – despite higher-than-expected growth in the third quarter – and the ongoing Brexit negotiations,” he said.

“Mortgage rates have started edging up on the back of higher funding costs but lenders are still competitive and keen to lend so it is not too late for those looking for a cheap fixed rate. The remortgaging market should continue to thrive this autumn.”

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