Martin Beck, senior economic advisor to the EY ITEM Club, comments on today’s borrowing figures

29 July 2014

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“Previous tentative signs of cooling in the housing market may have been a Mortgage Market Review-related blip. But robust growth in consumer spending is still showing only limited signs of translating into a pick-up in household borrowing. Overall, the economy remains a long way from the explosive credit growth seen in the run-up to the financial crisis.

“But there are signs that the housing market may be picking up steam again. After four consecutive monthly declines, mortgage approvals in June rose to the highest level since February - the biggest monthly increase in over five years. If momentum in the housing market continues to build up in coming months, the FPC may feel compelled to take further action.

“With consumer confidence running at a nine-year high, the portents are for household borrowing growth to rise further. That said, with their debt burdens still high and wages growth remaining very subdued, the appetite among households to go on a borrowing binge looks set to remain limited.”