UK consumer borrowing and mortgage lending gathered momentum last month, suggesting economic growth will beat a weak start to 2017 as the Bank of England considers when to start to raise interest rates.
Bank of England data showed growth in unsecured consumer borrowing picked up to 10.2% on an annualised basis in the three months to May from April's 9.7%.
This was its joint highest reading since November.
Bank of England Governor Mark Carney said yesteday that the bank would discuss over the coming months when to start to raise interest rates from their current record low, prompting markets to bring forward bets on when rates will rise.
UK economic data has been mixed so far this quarter, but today's figures exceeded expectations.
The number of mortgages approved for house purchase rose to 65,202 in May, little changed from an upwardly revised reading in April but beating all economists' forecasts in a Reuters poll.
In cash terms net consumer lending rose by £1.732 billion last month, again beating all economists' forecasts.
The UK economy slowed sharply in the first three months of this year as consumers felt the pinch of rising inflation in after last year's Brexit vote, and households and home-buyers are under close scrutiny to see how much this is continuing.
Mortgage lender Nationwide said this week that house prices had rebounded in June after three months of falls, but warned this probably represented month-to-month volatility and that the outlook for house prices for 2017 was subdued.
Mark Carney said on Tuesday that consumer borrowing was rising far faster than incomes, and that lenders had loosened credit standards due to "intense competition".
British regulators would publish new guidance to lenders next month, and the Bank of England planned to bring forward its annual check on lending risks by two months to September, he said
UK mortgage lending had been rising more slowly. But today's figures showed net lending increased by £3.531 billion in May, its biggest rise since March 2016 and faster again than all economists' forecast.
Compared with a year earlier, net mortgage lending is up 2.9% on a year ago.
Both UK home-buyers and shoppers are under pressure from a squeeze on real take-home pay as consumer price inflation rises at its fastest pace in nearly four years while wage growth slows.
