More evidence that the economy is slowing, adding to the case against further rises in interest rates, came from a separate report from the Finance and Leasing Association. It found the rate at which companies are increasing investment spending is falling sharply. Tony Jukes, chairman of the FLA, said: "Businessmen are cutting back on investment, not increasing it."
Total mortgage lending in April was pounds 1.3bn compared with pounds 1.6bn the previous month, the Bank of England reported. It was the lowest figure for new home loans since mid-1993. The year-on-year rate of growth of mortgage lending slowed too, down to 5.2 per cent.
Other consumer borrowing was fairly steady. New loans, at pounds 498m in April, were slightly lower than the previous month. The annual growth of consumer credit remained buoyant at 12.5 per cent, but could be past its peak as monthly increases have begun to slow. Bank lending for personal loans and credit card borrowing were higher than in March. However, there was a sharp fall in specialist lending.
The relative buoyancy of consumer credit is a puzzle given the recent declines in retail sales volumes. Andrew Milligan, chief economist at New Japan Securities, said some households might be sustaining spending by borrowing at a time when tax increases had hit incomes.
Michael Saunders, of Salomon Brothers, thought another explanation was more important. "There is a greater availability of low-interest deals. This is one way retailers are competing," he said. This was consistent with FLA figures showing a 29 per cent rise in retail credit in the year to April.
The Bank of England statistics showed that lending outside the personal sector, mainly to companies, has soared. It rose by pounds 6.4bn in March, around half of which was due to the Glaxo-Wellcome deal, and by another pounds 3bn in April.
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