BoE Warns Banks About Rise in Consumer Lending

A surge in consumer lending means British banks are at risk of incurring losses, the Bank of England said on Tuesday, warning that some might be letting credit standards slide as they compete to offer debt to households.

Consumers ramped up their borrowing by more than 10 percent late last year, the fastest growth in a decade, which helped drive strong economic growth despite June’s vote to leave the European Union. Rates of saving fell to their lowest in more than 50 years.



But the economic outlook is now darkening as households face rising living costs in the wake of sterling’s tumble against the dollar and the euro, and wage growth is expected to remain below its long-run average.

Last week the BoE said it was taking a closer look at consumer borrowing, and on Tuesday it gave more details.

“An easing in credit supply conditions appeared to have contributed to the growth in consumer credit, with intense competition in some segments of the market,” the BoE said in a summary of the latest meeting of its Financial Policy Committee, which looks at financial stability risks.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza