Lending to British households rose in November to its highest monthly total in more than seven years, an increase that will intensify concerns about rising indebtedness.
Bank of England data showed Britons borrowed GBP5.4 billion ($7.96 billion) in November, net of repayments, the largest monthly increase in lending since April 2008.
The increase was driven by a rise in both mortgage lending and unsecured borrowing, both of which also hit seven-year highs.
The pickup in borrowing highlights consumers’ improved confidence, and suggests the housing market and consumer spending will continue to power economic growth in the year ahead.
But it also underscores that Britons are getting deeper into debt again after years of paring back borrowing.
Economists warn that some households may struggle to cope with higher interest rates, especially while wage growth remains weak.
BOE officials led by Gov. Mark Carney have signaled they won’t rush to raise rates in Britain as long as inflation remains subdued. Annual inflation was close to zero for much of 2015, far below the BOE’s 2% target. Economists doubt the BOE will raise rates until later this year.
Officials have said they will instead seek to prevent credit growth threatening the economy by using new “macroprudential” tools designed to ensure banks don’t hand out too many risky loans and can weather losses on any that do go sour. Already last year officials took action to clamp down on lending to homebuyers seeking to borrow more than 4 1/2 times their annual income.
Monday’s data also showed borrowing by businesses remains subdued. Net lending to nonfinancial firms fell on the month by GBP878 million, driven by loan repayments by larger firms.