Latest figures from the major British banking groups for October show that net sterling lending (after allowing for securitisations) increased by £13.4bn (+1.5%) to £883bn.
This compared with September's underlying rise of £15.1bn and the recent monthly average of +£9.7bn.
October saw lending to individuals rise by an underlying £6.8bn. Mortgage lending was very buoyant, rising by £5.6bn, the strongest monthly rise on record, and some 19% above the recent monthly average. Consumer credit was as strong as in September, again rising by an underlying £1.1bn, though card borrowing was not as strong as of late.
Lending to the financial sector increased by £1.0bn, with insurance companies and miscellaneous financial intermediaries showing increased demand for finance. For the rest of the economy, increased lending to real estate companies, transport & communications, retailers and manufacturers all featured.
Since the early part of this year, deposit growth has been subdued, but September's net inflow of £5.1bn, followed by October's rise of £4.4bn (+0.7%) to £615bn, reflects a healthier picture. Personal deposit inflows in October were the strongest since May, rising by £3.2bn.
Simon Pitkeathley, executive director of the British Bankers Association, says: “Consumer confidence shows little sign of falling if October's record rise in mortgage lending and strong consumer credit is anything to go by, with only credit card borrowing showing any sign of easing. With no tangible signs of financial strain, borrowing continues to appear affordable, but with the Christmas shopping season approaching, it is important that consumers remain aware of their commitments and manage them appropriately.
“On the company front, the increase in demand for finance from real estate companies, transport and communications, retailers and manufacturers shows that those sectors all seem to be active in the economy.”