British consumers started the new year borrowing in earnest again, piling on debt at the fastest pace in eight months despite widespread expectations of higher interest rates to come. The Bank of England said on Monday that consumer credit rose by 1.93 billion pounds in January, the biggest jump since May and not far off the 2.1 billion pound record increase seen two years ago. Analysts had predicted consumer borrowing would rise by only 1.2 billion pounds after a sharp slowdown in December had prompted suggestions that consumers were reining in their borrowing after the BoE raised interest rates in November. But the latest data suggest that November's hike or the expectation of further increases in the future did little to slow the consumer in January. The BoE then raised rates again last month, by a quarter-point to 4.0 percent, partly because it was worried about the rapid expansion of debt levels. Most analysts expect the BoE's Monetary Policy Committee to leave rates unchanged at this Thursday's meeting but raise borrowing costs again in May.
Mortgage lending also picked up in January, rising by 8.71 billion pounds after an increase of 8.35 billion pounds in December. That left it 14.4 percent higher than a year earlier, the same record jump as in December. But perhaps in a sign of weaker but still strong housing market activity in the months ahead, the number of mortgage approvals, loans agreed but not yet made, slipped back to 110,000, the lowest since July last year. Total consumer borrowing rose by 10.64 billion pounds, the biggest increase since October and just a few hundred million pounds shy of September 2003's all-time record.///