UK bank lending growth to fall to three-year low
Growth in UK bank lending is forecast to stall in the coming years as borrowers feel the pinch of uncertain economic conditions. Lending growth is expected to slow this year to 2.9 per cent before dropping to a three-year low of 2.2 per cent in 2027, according to figures from EY. The figures mark a [...]
UK bank lending growth is forecast to slow to a three-year low of 2.2 per cent in 2027, according to figures from EY. This marks a significant decline from 3.6 per cent last year, as borrowers become more cautious amid uncertain economic conditions. Dan Cooper, head of banking at EY UK & Ireland, stated that the moderation in lending activity is widespread, driven by households and businesses responding to economic uncertainty and higher costs.
The report attributes this shift to ongoing geopolitical tensions, with businesses and households facing heightened pressures due to the conflict in the Middle East and disrupted energy supply chains. Brent crude oil prices reached a high of $114 this year, trading around the three-digit mark over the last month. Business investment, housing activity, and consumer borrowing are expected to remain subdued in the near term, with business borrowing being the most affected.
Corporate borrowing is projected to grow by just 2.1 per cent this year, down from 5.3 per cent last year. Mortgage lending growth is expected to increase modestly to 3.3 per cent this year, but this is anticipated to decline to 2.2 per cent next year due to rising unemployment, slower wage growth, and potential higher interest rates.
The Bank of England's latest data revealed that net mortgage approvals for UK house purchases fell to 54,900 in August 2026, below market expectations and the lowest level since December 2023.
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