Household borrowing nudged up in April, signalling that consumer confidence could be headed for a recovery.
According to the Bank of England’s Money and Credit report, net lending for consumer credit came in at £1.8 billion last month.
It represents the highest level since November 2016 and is a bounce back from March’s paltry £400 million, which was the lowest level since November 2013.
The increase was driven by credit card spending and other loans, helping the 12-month growth rate in consumer credit rise to 8.8% versus 8.6% in March.
Howard Archer, chief economic adviser to the EY ITEM Club, said the data may play into the Bank’s thinking when considering whether to hike interest rates in the coming months.
He added: “The Bank will be focusing on whether the rise in unsecured consumer borrowing in April is a sign that consumer appetite for borrowing is beginning to pick up anew or primarily a rebound from a particularly weak performance in March, when consumer activity and borrowing was affected by the severe weather.”
The Bank’s figures also show that UK mortgage approvals dropped slightly in April, falling from 62,802 to 62,455.
Mr Archer said that the numbers indicate that housing market activity “remains muted” as it remains under pressure by limited consumer purchasing power, fragile confidence and likely the prospect of an interest rate rise.
This was borne out earlier on Thursday when figures from Nationwide Building Society showed house prices went into reverse in May.