LONDON (Reuters) - Net borrowing by British consumers was the highest in nearly seven years in November and lenders approved the most mortgages since June, according to Bank of England data that adds to signs that households are mostly coping with high interest rates.
Consumer borrowing grew by a net 2.0 billion pounds ($2.5 billion), the most since March 2017 and more than any forecast in a Reuters poll of economists, after an increase of 1.4 billion pounds in October.
Official data published last month showed much stronger-than-expected sales by retailers in November, boosted by Black Friday seasonal discounts.
The BoE data showed loans for home purchases totalled 50,067 in the month, higher than a median forecast of 48,500 in the Reuters poll.
The British central bank raised interest rates to a 15-year high of 5.25% in August and has said it expects to keep them elevated for "an extended period of time" to ensure that the risks posed by the surge in inflation in 2022 are snuffed out.
A separate survey published at the same time as the BoE data showed Britain's services firms grew more strongly in December than initially thought and optimism hit a seven-month high.
Sterling was strengthened to be up about 0.5% against the U.S. dollar after the BoE data and the survey were published.
The surge in borrowing costs caused a slowdown in the housing market over much of 2023. Thursday's data showed the annual growth rate for net mortgage lending slowed to 0.3% in November, the lowest since the monthly series began in March 1994.
But changes in the total value of mortgage lending typically lag the more forward-looking approvals numbers.
Ashley Webb, an economist with Capital Economics, said the resilience of the approvals data suggested that falls in recent weeks in mortgage interest rates would encourage new borrowing to buy a home.
But the creeping impact of higher borrowing costs - which will push up the cost of around 1.5 million existing fixed-rate mortgages that are due to expire in 2024 - would take its toll on consumer spending, Webb said.
The BoE data showed households were continuing to move savings into higher interest, fixed-term accounts.
($1 = 0.7868 pounds)