Brexit impact on commercial or individual lending

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Figures released by the British Bankers’ Association (BBA) reveal that there has been little change in the borrowing patterns for UK consumers and businesses in the month of July following the EU referendum result.

In an August 2016 article on its own website, the BBA said mortgage borrowing and consumer credit growth in July 2016, was the same as that in June 2016, with the annual rise in mortgage borrowing at 3% up to the end of July.

Although house prices rose by 8.7% in July 2016, the value of mortgages for houses purchases rose by only 1%.

Commenting on the data, Rebecca Harding, the Chief Economist of the BBA, said:

“The data does not currently suggest borrowing patterns have been significantly affected by the Brexit vote, but it is still early days. Many borrowing decisions will also have been taken before the referendum vote.

“All of this suggests that, for the UK borrower, whether commercial or household, it is business as usual for the time being.”

Business borrowing, including commercial bridging loans and longer-term loans, had a small decrease in June, but looking at the last few months as a whole, there has been a strong upward trend.

Although the BBA is optimistic, it remains cautious about drawing conclusions from the amount of data available during the few weeks following Brexit. If there is a strong impact from Brexit, then Harding believes that this will not be known for a few months.

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