Consumer Payment Card News

British Consumer Credit in a Bit of a Tizzy as Car Loans Drop

British Consumer Lending

British consumer credit took a jab in the knees in March largely due to a fall in new loans to finance car purchases. In addition, credit card users made larger card repayments but the growth rate of credit card lending ticked up for the first time since June 2018, to 6.6% YOY.

The Bank of England reported this morning consumer credit increased by £0.5 billion in March, the lowest increase since November 2013.

The extra amount borrowed by consumers to buy goods and services fell to £0.5 billion in March. This was the lowest monthly flow since November 2013 and well below the average of £0.9 billion since July 2018.

The fall in net lending on the month was due to weaker net borrowing for other loans and advances, which fell from £0.8 billion in February to £0.2 billion. Within this, new borrowing for car finance fell sharply, alongside weaker car registration numbers in March 2019 than in previous years.

Net credit card borrowing fell slightly on the month due to stronger repayments. Though at £0.3 billion, this was in line with its average since July 2018.

The annual growth rate of consumer credit has continued to slow, reflecting the relatively weak flows of consumer credit over the past twelve-months. It fell to 6.4% in March, well below its peak of 10.9% in November 2016.

U.K. Consumer Borrowing

U.K. consumer credit card lending settled at £72.8 billion for a 6.6% YOY gain in March, compared to a revised £72.7 billion or a 6.3% YOY gain in February, and compared to a revised £72.5 billion for a 6.5% YOY increase for January 2019. One-year ago U.K. consumer credit card lending settled at £70.7 billion, according to figures collected by CardData.

U.K. other consumer loans, advances posted at £143.9 billion for a 6.3% YOY gain in March, compared to a revised £143.8 billion or a 6.5% YOY gain in February, and compared to a revised £144.1 billion for a 6.7% YOY increase for January 2019. One-year ago U.K. consumer credit card lending settled at £238.7 billion, according to figures collected by CardData.

U.K. total consumer credit reported at £216.7 billion for a 6.4% YOY gain in March, compared to a revised £216.5 billion or a 6.5% YOY gain in February, and compared to a revised £216.6 billion for a 6.6% YOY increase for January 2019. One-year ago U.K. consumer credit card lending settled at £209.5 billion, according to figures collected by CardData.

Consumer Outlook

The GfK Consumer Confidence Index for the U.K. was unchanged for a third month at -13 in April, slightly above market expectations of -12.
Increases in indicators measuring economic situation over next 12 months (-34 vs -36 in March) and over last 12 months (-30 vs -33) were offset by declines in indexes measuring personal finances over next 12 months (0 vs 2) and last 12 months (-1 vs 0), and big purchase climate (-1 vs 1).

GfK says despite political carry-on in the Westminster bubble with the clock ticking on Britain’s eventual departure from the EU, consumers are holding firm and remain unshaken by the daily headlines of turmoil and intrigue, although we remain in negative territory.

Meanwhile, car loans in the U.S.A. may also be in a downturn. New vehicle retail sales in April are expected to fall 5.3% compared to this time last year. The industry continues to show signs of softness with April representing the 10th straight month of year-over-year retail sales declines, according to CardTrak.

U.K. Credit Card Loans

(seasonally adjusted)

Mar 2016: £64.3 billion +7.4%
Mar 2017: £67.7 billion +8.9%
Mar 2018: £70.7 billion +8.9%
Mar 2019: £72.8 billion +6.6%

Additional & Historical Monthly U.K. Credit Card Loans Data

U.K. Other Loans/Advances

(seasonally adjusted)

Mar 2016:  £118.0 billion  +11.0%
Mar 2017: £129.7 billion  +10.9%
Mar 2018: £138.7 billion + 9.3%
Mar 2019:  £143.9 billion  +6.3%

Additional & Historical Monthly U.K. Other Loans/Advances Data

U.K. Total Consumer Credit

(seasonally adjusted)

Mar 2016:   £182.3 billion + 9.7%
Mar 2017: £197.3 billion +10.2%
Mar 2018: £209.5 billion + 8.6%
Mar 2019: £216.6 billion + 6.4%

Additional & Historical Monthly U.K. Total Consumer Credit Data

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Source: Bank of England; RAM Research; CardData; CardTrak

New and Revised figures as of 05/01/19

Note: Lending to individuals is split between lending secured on dwellings (mortgages) and consumer credit. Consumer credit is further split between credit card debt and other loans and advances. Student loans are excluded.