More pounds pushed on the plastic

Credit card lending took its largest jump in two years in August as consumers shrugged off hints of a slowdown in the housing market to pile up fresh debt, official figures showed yesterday.

The Bank of England said net consumer credit, which includes borrowing on cards and personal loans, rose by £2bn in August, with shoppers spending an extra £812m on their credit cards - the biggest monthly increase since May 2000.

"The appropriate descrip tion for this data is somewhere between 'still very strong' and 'still extremely strong'," said Michael Saunders of Citibank. "The consumer boom rolls on."

However, analysts said mortgage lending figures, also released yesterday, hinted that the buoyant property market, which has helped prop up consumer spending, could weaken in the coming months.

The year-on-year increase in mortgage lending in August, at 12%, was the largest in more than a decade - but the number of new mortgages approved fell to 108,000, well below the average of 117,000 a month between April and July. The value of new loan approvals also slipped back to £18.8bn, from £20bn in July.

With the Nationwide today expected to signal that house prices are still expanding at an annual rate of close to 20%, Jonathan Loynes, of Capital Economics, said the drop in mortgage approvals could presage a fall in growth to about 15%.

"It would be premature to conclude that a significant slowdown in the housing market is now underway, but there are signs at least that the peak of the boom has passed."

Lenders have been warning for months that the rate of property price inflation - running well ahead of the growth in wages - is unsustainable . Fears of a downturn have been intensified by recent falls in equity prices, which are expected to have a knock-on effect on house prices.

The Bank's monetary policy committee will meet next week to set interest rates, but most observers believe they will wait for firmer evidence of a slowdown before considering a cut in borrowing costs from their current 38-year low of 4%.