The Bank of England has released its latest Money & Credit data indiating that consumer credit increased by £0.9 billion in October, similar to the previous few months, but below much of the period since 2016. Mortgage market activity remained broadly stable in October. The flow of mortgage lending increased to £4.1 billion in October and mortgage approvals for house purchase were 67,000. Whilst net finance raised by businesses was strong at £5.8 billion in October, as both bank lending and bond issuance rose. Credit card borrowing accounted for £0.4 billion of the net rise £0.9 billion in October.
Commenting on the latest data, StepChange Debt Charity Head of Policy Peter Tutton said “Although the flow of credit card borrowing may be slowing down, it’s important to recognise that the amount still owed on credit cards remains extremely high. Some £72 billion of credit card debt remained outstanding in October – up from around £69 billion just a year ago. While it may be true that some people are making greater use of cards for transaction rather than for borrowing, there is still a massive backlog of rolling card debt, with some three million people potentially subject to the Financial Conduct Authority’s new interventions to address persistent credit card debt.”
“The high cost of credit may not be immediately obvious within some kinds of products, which are often held by people experiencing problem debt. Credit cards and overdrafts can be examples of this, and we urge the FCA to remain focused in addressing them.”
George Robbins, director of financial services at TransUnion (formerly Callcredit) said “The October credit and money statistics from the Bank of England showed that consumer credit increased by £0.9bn, in a similar vein to the previous few months. Whilst this is lower than we’ve seen in much of the period over the past couple of years, it is likely to increase as we head toward the Christmas season, with all the additional spending that brings – and the bigger picture remains one of high consumer debt in the UK.”
“With UK Finance revealing that more consumers than ever are using their credit cards for everyday spending, rather than just one-off purchases, the Christmas rush is going to be a test of good lending practices. Credit providers should be using all the tools at their disposal to ensure lending is responsible and that consumers aren’t overburdening themselves.”
“The Bank of England statistics also showed that mortgage market activity was broadly stable in October, with 67,000 approvals for house purchases and mortgage lending of £4.1 billion. This is heartening as it suggests that the looming uncertainty of Brexit isn’t deterring buyers from stepping onto, or up, the property ladder, but again it’s essential that mortgage providers are confident that these buyers have been sufficiently stress-tested and can evidence affordability both now, and in the future.”