Households’ non-mortgage borrowing grows at slowest annual rate since 2014

Households are putting more cash into savings accounts while annual growth in consumer borrowing has weakened to its lowest levels since 2014.

The Bank of England’s Money and Credit report said households “significantly” increased deposits in savings accounts that pay interest in February.

It said households’ money holdings increased by £5.3 billion – above the £3.3 billion average of the previous six months.

The report said: “This strength was mainly due to continued strength in instant access interest-bearing savings accounts.”

The report also said annual growth in consumer credit, which includes borrowing using credit cards, personal loans and overdrafts, stood at 6.3% in February – the lowest annual increase since September 2014.

The Bank said growth in consumer credit was “well below” a peak of 10.9% seen in November 2016.

Meanwhile, the number of mortgages approved to home-buyers fell back in February, with 64,337 loans recorded – slightly below the average seen over the previous six months of 65,500.

Howard Archer, chief economic adviser at EY Item Club, said lenders have become more careful about advancing non-mortgage credit, tightening up their lending criteria.

He said the overall impression of consumers is that they have “become more careful in their borrowing amid concerns over the economic outlook”.