Pull to refresh
Logo
What Changed
Following Why Sign Up
UK consumer borrowing hit a monthly record in August, Bank of England data show

UK consumer borrowing hit a monthly record in August, Bank of England data show

Money Moves Interactive

Households added a record £2.7 billion in unsecured debt in August; credit card defaults keep climbing and lenders have cut mortgage availability for the first time in three years.

October 29th, 2026: September borrowing data shows mortgage approvals at lowest since late 2023

Overview

Updated Nov 1

British households borrowed £2.7 billion in unsecured credit in August, revised up from a first estimate of £2.46 billion and a monthly record in the Bank of England's series, which began in 1993. In September, unsecured lending slowed to £1.9 billion, slightly below forecasts, but its annual growth rate reached 9.8%, the fastest since April 2018.

Mortgage approvals for house purchase fell to 53,443 in September, the lowest since late 2023, as borrowing costs rose. Markets treat a Bank of England rate rise to 4% at its meeting next week as close to certain. Finance minister John Healey's October 28 budget has no reported outcome in the sources reviewed.

Why it matters

With credit card defaults already rising for six straight quarters, a November rate hike could push stretched households into arrears.

Guess first

UK consumer credit broke a 21-year cash record in August. By how much?

Net new credit-card and loan borrowing each month since 1993, excluding mortgages and student loans.

-£2bn£0bn£2bn£4bn 200020102020 Old record: £2.26bn Covid low: -£7.46bn, off the chart £2.68bn

August 2026: £2.68bn. That beat January 2005 by 19%, in cash. At August 2026 prices, January 2005 was about £4.2bn, so the record is cash only. September fell back to £1.91bn.

UK consumer credit broke a 21-year cash record in August. By how much? Notes and the latest months; 402 points from Apr 1993 to Sep 2026 at the source.
DateValue
Jan 2005£2.26bn
Apr 2020-£7.46bn
Aug 2025£1.58bn
Sep 2025£1.54bn
Oct 2025£1.79bn
Nov 2025£2.05bn
Dec 2025£1.65bn
Jan 2026£1.88bn
Feb 2026£1.98bn
Mar 2026£1.93bn
Apr 2026£1.87bn
May 2026£1.81bn
Jun 2026£1.89bn
Jul 2026£2.25bn
Aug 2026£2.68bn
Sep 2026£1.91bn

As of 2026-11-01. Bank of England series LPMB3PS, seasonally adjusted, all 402 months, cash amounts. Line cut at -£2bn; four 2020-21 months fall below. August first printed at £2.464bn. Price comparison: ONS CPI index D7BT, our sum. Sources: Bank of England statistical database, series LPMB3PS, ONS consumer price index, series D7BT.

Questions about this story

Free account needed to ask — your question is kept and asked for you right after sign-up. Answers are public.

No questions yet — be the first to ask.

Key Indicators

£1.9B
Net unsecured consumer lending, September 2026
£1.914 billion, slightly below expectations and down from August's record; the annual growth rate of unsecured lending reached 9.8%, the fastest since April 2018.
9.6%
Annual growth in consumer credit, August
Up from 9.3% in July; credit card growth accelerated to 13.3%, fastest since October 2005.
53,443
Mortgage approvals for house purchase, September
Down from 54,814 in August and the lowest since late 2023, a slightly bigger fall than economists expected.
21.55%
Interest rate on credit card balances, August
Up from 21.45% in July; rates above 20% become costly when balances persist.
6
Consecutive quarters of rising credit card defaults
Longest stretch since 2008-09, per the BoE's October 8 credit conditions survey; lenders expect another rise in Q4.

Voices

Curated perspectives — historical figures and your fellow readers.

Sign up to generate historical perspectives on this story.

Log in Sign Up

People Involved

Katie Clinton
Katie Clinton
Head of financial services advisory, KPMG UK
Offered both interpretations of the borrowing surge
 John Healey
John Healey
UK finance minister
Was scheduled to present his first annual budget on October 28, 2026; outcome not yet reported.
MS
Matt Swannell
Chief economic adviser, ITEM Club
Read the data as evidence of households cushioning spending power
RW
Rob Wood
Chief UK economist, Pantheon Macroeconomics
Says borrowing helps households bridge higher energy bills

Organizations Involved

Bank of England
Bank of England
Central bank
Published September Money and Credit data on October 29 showing mortgage approvals at their lowest since late 2023; markets see a November rate rise to 4% as near-certain

The UK's central bank, publisher of monthly Money and Credit statistics and the quarterly Credit Conditions Survey.
GfK
GfK
Market research firm
Consumer confidence index hit a two-year high in September 2026

Runs the UK's long-running consumer confidence survey.

Timeline

September 2026 October 2026

5 events Latest: October 29th, 2026 · 1 week ago
Tap a bar to jump to that date

  1. September borrowing data shows mortgage approvals at lowest since late 2023

    Latest Data release

    The Bank of England reported mortgage approvals of 53,443 in September, down from 54,814, and net mortgage lending of £3.866bn, its lowest since May. Unsecured lending rose £1.914bn, slightly less than expected.

  2. Finance minister presents first budget

    Upcoming

    John Healey expected to announce tax rises; borrowing data raises the stakes.

  3. BoE survey shows rising card defaults, tighter mortgage supply

    Data release

    The Bank of England's quarterly Credit Conditions Survey found credit card defaults rising for a sixth straight quarter, the longest stretch since 2009, and lenders reducing mortgage availability for the first time in three years.

  4. Consumer credit annual growth accelerates to 9.6%

    Economic data

    Bank of England data for August shows consumer credit growing 9.6% from a year earlier, with credit card borrowing up 13.3%.

  5. Bank of England releases record borrowing figures

    Data release

    BoE reports £2.464 billion net consumer lending in August, the most since records began in 1993; mortgage approvals were 54,814 in August, down from the previous month.

Scenarios

1

Bank of England raises rates in November as borrowing boom persists

Likely Resolves by Dec 15, 2026

Discussed by: Reuters; investor pricing cited in coverage of the BoE data

Markets already price a rate increase at the November Monetary Policy Committee meeting as the first since the Iran war outbreak, with another move in February. Strong consumer credit data gives hawks a reason to act: if borrowing reflects resilient demand, rates are not biting. A hike would raise the cost of credit card debt, already carrying rates above 20 percent, and of new personal loans.

2

Borrowing holds up as confidence-driven spending continues

Uncertain Resolves by Dec 1, 2026

Discussed by: KPMG UK's Katie Clinton; GfK's two-year-high confidence reading

If credit-fueled spending reflects stronger household confidence and better income expectations, retail sales keep growing and the economy absorbs higher rates. GfK's survey, which hit a two-year high in September, supports this view, as does the official figure showing shoppers unexpectedly increased spending in August. Official retail sales data over the following months would confirm the pattern.

3

Household defaults rise, lenders tighten credit

Possible Resolves by Mar 1, 2027

Discussed by: Pantheon Macroeconomics' Rob Wood; ITEM Club's Matt Swannell; Newsquawk analysis

If households are borrowing because energy bills outpace incomes, the credit boom is a strain signal. Rising defaults would push lenders to tighten underwriting, hitting consumption and slowing the economy. The Bank of England's quarterly credit conditions survey and Financial Conduct Authority data would show a measurable uptick in consumer credit arrears or defaults.

4

November rate hike to 4% lands on an already-stretched credit market

Likely Resolves by Jan 31, 2027

Discussed by: BoE Credit Conditions Survey; Mortgage Strategy on rate expectations

The October survey already shows lenders cutting mortgage availability and expecting credit card defaults to rise again in Q4. A November hike to 4 percent would raise borrowing costs further, hitting the households who borrowed at a record pace in August and likely accelerating the defaults trend. Solid GDP data gives the Bank room to act.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2004–2007

UK debt boom before the 2008 financial crisis (2004–2007)

British households borrowed heavily through the mid-2000s as house prices climbed, with consumer credit and mortgage debt growing in tandem. The Bank of England warned repeatedly about the pace of household indebtedness.

Then

When asset prices fell in 2007–2008, the credit boom unwound as defaults rose and lenders withdrew. Britain entered a deep recession with household debt near record highs.

Now

The episode produced tighter mortgage lending rules and a decade of slow credit growth, though household borrowing resumed rising sharply in the 2020s.

Why this matters now

Today's combination of record consumer credit and weakening mortgage approvals echoes the late stages of that cycle, though the current drivers — energy prices and inflation — differ from a housing bubble.

2016–2018

UK credit card lending spike and regulatory response (2016–2018)

Unsecured consumer credit grew about 10 percent annually in 2017, prompting the Bank of England's Financial Policy Committee to flag it as a risk to financial stability. The Financial Conduct Authority subsequently introduced rules to cap persistent credit card debt.

Then

Lenders tightened underwriting on new credit, and the FCA's persistent-debt rules pushed firms to help customers pay down balances.

Now

Regulatory intervention, rather than interest rate changes, was the main brake on unsecured lending. It established a template for how the BoE responds to rapid consumer credit growth.

Why this matters now

At 9.6 percent annual growth, today's borrowing pace is close to the level that triggered a regulatory response a decade ago. The Bank of England could again move through underwriting standards rather than rates.

Sources

(18)
+12
London Stock Exchange News (Reuters) Trading Economics KELO-AM (Reuters) Newsquawk Daily Mail Business Quarter Investing.com Business Times (Bloomberg) Reuters via Euronext Mortgage Professional America Mortgage Strategy Building Societies Association Bank of England Briefs MarketScreener (Reuters) Traders Union London Stock Exchange News (Reuters) MarketScreener