UK consumers borrowed an additional £1.9bn in February, a five-year high, of which £1.5bn was borrowing racked up on credit cards.
Mortgage approvals fell slightly in February, but remained above pre-pandemic levels, according to data from the Bank of England published this morning. The monthly figure fell to 71,000 in February from 73,800 in January, still above the pre-pandemic average of 66,700 in the 12 months to February 2020.
Paul Dales, chief UK economist at Capital Economics, said: “The leap in credit card borrowing in February and smaller increase in household savings could suggest that the cost of living crisis is already starting to bite. But we think it is more likely that households had the confidence to borrow and spend a bit more and/or were willing to use borrowing/savings to smooth their spending. As a result, the economy may have a bit more near-term momentum than we thought.
“The £1.9bn rise in consumer credit beat the consensus forecast of £800m, was the largest in five years and compared to the pre-pandemic 2019 average rise of £1.1bn. Admittedly, as it was driven by a £1.5bn gain in borrowing on credit cards, it could be a result of the cost of living crisis forcing people to turn to credit.”