The Bank of England has today published its latest monthly Money and Credit report showing growth in consumer credit of 9.3 percent in the year to January 2018. Outstanding balances for consumer credit now stand at over £207.5 billion.

Commenting on the latest figures Money Advice Trust Joanna Elson OBE, Chief Executive said “Whilst the rate of growth in consumer credit has eased slightly outstanding balances remain high at £207.5 billion as the reliance on borrowing for millions of households across the UK continues.”

“Borrowing on credit cards rose from £0.5 billion in December to £0.7 billion in January. At National Debtline, nearly one in three of the people we help are struggling with credit card debt. While most households will be able to meet repayments, our concern is that many people already struggling with rising living costs and low wages are at risk of falling into financial difficulty.”

“The slightest change in circumstances, such as a small drop in income, can be all it takes to push someone into problem debt.”

Peter Tutton, Head of Policy at StepChange Debt Charity, said “It’s encouraging that consumer credit growth has steadied, but the fact remains that household debt levels are high, with 620,000 people contacting us for help last year. There is no place for complacency about the state of household finances, with two-fifths people of the people we advised struggling to keep up with even basic bills like rent, utilities and council tax.”

“With so many financially vulnerable households it is notable that credit card lending, the most common debt we see, has seen the fastest growth. As the FCA is just about to bring in new credit card rules to help millions of consumers stuck in persistent debt, card lenders still need to make sure lending is responsible and affordable.”

Steve McNicholas, Managing Director – Credit and Marketing Data, Callcredit Information Group, co, said “Mortgage approvals have rebounded unexpectedly in January, following the decrease in December to the lowest level in three years. Looking ahead, mortgage approvals are likely to remain subdued both in light of the ongoing speculation about interest rates and because of the slow growth in the housing market overall. This is especially true for the first-time buyer’s market, where house prices continue to rise faster than wages. In addition, consumers’ increased dependence on credit cards could also have an impact on affordability.”

“Last year saw the first rate hike in 10 years, with the Bank’s governor, Mark Carney, hinting that at least two more will be needed by 2020. This will likely be a concern for many with variable rate mortgages. However, lenders should not react in haste. Instead, they should maintain stringent ongoing affordability checks which are crucial not only in order to protect individual borrowers but the wider economy, from a rise in unsustainable household debt.”

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