06 May 2015
Bank of England figures show that between February and March consumer borrowing rose by £1.2bn – the largest rise since the 2008 financial crisis.
Most of that – some £1.1bn – was accounted for by unsecured borrowing, such as overdrafts and bank loans. That was the highest figure since February 2008, and has been widely attributed to current record low borrowing rates.
By contrast, credit card lending showed only a small rise of £200m, while the number of mortgages approved in March was 61,341, a slight drop from 61,523 in February.
Although the increase in borrowing has led to fears of a rise in personal debt, a separate report by the Insolvency Service last week showed a steep decline in the number of personal insolvencies in England and Wales.
In the first three months of the year some 20,826 individuals became insolvent, the lowest figure since 2005 and a drop of 18.6% compared to the same period a year ago.
That news was welcomed by the debt charity StepChange, but their head of policy Peter Tutton warned that the increase in personal borrowing meant that the dangers of the past could return.
‘With levels of personal borrowing growing rapidly once again, the next government and lenders must ensure that the mistakes of the pre-crisis credit boom are not repeated. Our concern is that growing levels of consumer credit will be followed by growing numbers of people falling into problem debt,’ he said.