Thursday, March 02, 2006

 

The rate of individual borrowing on credit cards, bank loans, and hire purchase agreements fell in January to its lowest level since 1994 as UK consumers attempted to cope with their debt problems.

 

Figures released today by the Bank of England show that consumer credit lending increased by £ 1.3 billion during January, but annually, UK growth in consumer borrowing fell to a level of 8.7%; a 12-year low.

Graph of % growth of consumer borrowing in the UK (Bank of England) .

 

The bulk of consumer credit consisted of £ 0.7 million borrowed against credit cards, with the remaining £ 0.6 million being made up of loans and other advances.

 

A £9.2 billion increase in mortgage borrowing was observed during January; a two year high that pushed the total net borrowing for mortgages and consumer credit to a healthier looking 10.3% per annum.

 

Interestingly though, although the amount of mortgage borrowing increased, the number of mortgages awarded did not increase during January. This is the first time that this has happened since November 2004.

 

It’s worth reminding ourselves that there was a steep increase in the number of individual bankruptcies during 2005, with nearly 70,000 people declared insolvent – the highest number since records began, with a third of these taking out an IVA (Individual Voluntary Arrangement).

 

With total consumer debt in the UK at £ 1.168 trillion and bankruptcy levels soaring, it’s no great surprise that our appetite for further borrowing is diminishing.

 

Further Information:

Bank of England website: