UK has witnessed the highest levels of consumer lending and the fastest increase since 2007, according to the British Bankers' Association (BBA). Loans by British banks to consumers increased 5.7% in the 12 months to November.
Net credit card lending rose to £318m (€430m,$472m), from £149m in October, while lending for personal loans and overdrafts also increased. A total of 44,960 mortgages were approved for purchase of houses, up from 37,407 in the same month last year but down from 45,463 approvals in October. Gross mortgage loans stood at £12.8bn, a 28% increase from November 2014
"These statistics show the continued strength of the mortgage market, with monthly new lending higher than at any time over the past seven years," said Richard Woolhouse, chief economist at BBA. Overall, the businesses in the country are taking advantage of record-low interest rates which was indicated by an increase in net lending to companies, particularly in the wholesale and retail sectors, Woolhouse told Reuters.
The BBA figures exclude lending by mutually-owned building societies, which constitute almost a third of all mortgages.
The Bank of England (BOE) attributed the increased lending to Britain's economic recovery for the third successive year. However, officials believe the country's growth was not overly dependent on borrowing.
Howard Archer, an economist with IHS Global Insight, pointed out that these figures come a day after official data indicated a decline in UK's household savings to its lowest since 1963. "This will fuel concern that consumers are borrowing more and saving less to finance their spending, which is likely a consequence of relatively high consumer confidence and extended low interest rates," he said.