UK consumers slow pace of borrowing as costs mount

LONDON (Reuters) -British consumers increased their borrowing by less than expected in July in a possible sign of caution among households as borrowing costs rise, Bank of England data showed on Wednesday.

Unsecured lending to consumers rose by 1.191 billion pounds ($1.51 billion) in net terms, less than the 1.3-billion-pound increase which was the median forecast in a Reuters poll of economists, and down from the 1.637 billion pounds rise in June.

The pace of growth in consumer credit over the 12 months to July slowed to 7.3%, the slowest increase since December last year.

The BoE data added to signs of a slowdown in the housing market as mortgage approvals by banks and building societies dropped by more than 5,000 on the month to 49,444, below the Reuters poll forecast of 51,000.

Britain’s economy has avoided a widely forecast recession so far this year but worries about a slowdown grew last week when a measure of business activity in August fell to its lowest since January 2021.

The BoE has raised interest rates 14 times in a row since December 2021 to tackle an inflation rate which was running at almost 7% in July.

($1 = 0.7913 pounds)

(Reporting by William Schomberg; editing by David Milliken and Bernadette Baum)