LONDON, June 29 (Reuters) – British households withdrew money from their savings in May at a record pace as a jump in interest rates pushed consumers away from credit, Bank of England data suggested on Thursday.
Households withdrew a net 3.8 billion pounds from savings – the biggest outflow on record – driven by withdrawals from bank accounts and only offset slightly by inflows into the government’s National Savings and Investment products.
The BoE data showed unsecured lending to consumers rose by 1.144 billion pounds ($1.45 billion) in net terms last month after a 1.513 billion-pound increase in April. It marked the smallest net increase this year.
A Reuters poll of economists had pointed to net consumer credit lending of 1.5 billion pounds in May.
The BoE said British lenders approved 50,524 mortgages in May up from a revised 49,020 in April but down from around 66,000 in May last year, before the rise in borrowing costs began to weigh on the housing market.
The Reuters poll had pointed to approvals of around 49,700.
The value of net mortgage lending contracted in May by 92 million pounds, following a 1.466 billion-pound fall in April.
It marked the first back-to-back falls in net mortgage lending since records began in 1997.
“Higher interest rates continued to weigh on bank lending in May, particularly in the housing market,” said Ashley Webb, economist from consultancy Capital Economics.
($1 = 0.7908 pounds)
Reporting by Andy Bruce; Editing by William Schomberg
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