UK consumer credit grows at fastest pace in nearly 10 years - BBA

A woman shelters under an umbrella as she uses a cash machine in Port Sunlight, northern England December 9, 2011. REUTERS/Phil Noble

LONDON, (Reuters) - British consumer credit expanded last month at the fastest pace in nearly 10 years and mortgage approvals hit a five-month high, according to industry data on Thursday.

The British Bankers’ Association figures underlined the strength of consumer demand since Britain voted to leave the European Union in June, although rising inflation and a slowing economy are expected to weigh on households next year.

Consumer credit increased at an annual rate of more than 7 percent in October, marking the strongest growth since November 2006, the BBA said.

British banks approved 40,851 mortgages for house purchases last month, up from 38,690 in September and the biggest number since May.

“Consumer confidence remains robust as borrowers take advantage of record low interest rates,” said Rebecca Harding, BBA chief economist.

“Mortgage approvals ticked up a little October. There has only been a relatively modest increase in activity since the Bank of England cut rates in August.”

The figures chimed with strong retail sales data earlier this month that underlined how little impact the vote to leave the EU has had on consumer spending so far.

Net credit card lending rose in October by 220 million pounds after a 179 million pound increase in September.

The BBA figures do not include lending by mutually owned building societies, which accounts for around third of mortgages. The next release of the more comprehensive Bank of England lending data is next Tuesday.

Reporting by Andy Bruce, editing by William Schomberg