Consumer borrowing grew at its lowest rate for three years last month after car sales dropped 20 per cent, the Bank of England revealed today.
The annual growth rate of consumer borrowing hit 7.7 per cent last month, the lowest it's been since June 2015, and far below the 10.09 per cent growth rate in November 2016.
Net new consumer borrowing excluding mortgages fell to £800m for September, from £1.2bn in August.
"New borrowing for car finance fell sharply," the Bank said, after car sales figures for September dropped by 20 per cent.
The Bank also attributed the drop to weaker demand for loans and advances, which more than halved year on year from £700m in September 2017 to £300m last month.
Credit card borrowing of £500m was in line with a six-month average.
“Even allowing for the impact of weakened car sales, due to special factors, September’s data reinforces the impression that consumers are currently relatively cautious in their borrowing while lenders have become warier about advancing unsecured credit," said Howard Archer, chief economic advisor to the EY Item Club.
Meanwhile, mortgage approvals hit £3.9bn in value for September, up by £800m from August.
The month-to-month spike in lending followed two relatively weak months of £3.3bn and £3.1bn in July and August respectively.
However, the annual growth rate of mortgage approvals was unchanged at 3.2 per cent, said the Bank.
It has been around three per cent since late 2016, as fewer people take out loans secured against their homes.
The number of mortgages approved for house purchases fell to 65,269 for September, down from a seven-month high of 66,101 in August.
"We suspect that the housing market will be relatively lacklustre over the coming months – although there are varying performances across the regions with the overall national picture dragged down by the poor performance in London and parts of the south east," said Archer.