The Bank of England has published its latest monthly Money and Credit report showing consumer credit growth remained at 8.8 percent in the year to June 2018. Outstanding balances for consumer credit stand at £213.2 billion.
The figures are published days after the Office of National Statistics revealed that British households spent around £900 more on average than they received in income in 2017, pushing their finances into deficit for the first time since the 1980s.
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said “Although consumer credit is continuing its relentless growth, for the majority of households this is unlikely to be an issue at this point in time. Our concern is what happens when people’s circumstances change. Even a small increase in costs could be all it takes to push many stretched households into financial difficulty. With British households now among the most indebted in major western countries, we could be storing up big problems for the future.”
Peter Tutton, Head of Policy at StepChange Debt Charity said “Whilst the growth in consumer credit recently stabilised, households are still at risk of being tipped into severe problem debt. We estimated 9 million people are already using credit just to make ends meet, as the recent ONS report showed the poorest 10% of households spent two-and-a-half times their disposable income. Therefore helping the households living on a financial knife must be a priority for public policy.”
“With credit card borrowing growing fastest and the FCA’s proposals for toughening affordability assessments released today1, we are looking for a clear statement from the regulator that credit markets, and credit cards in particular, must grow in a sustainable way and lending practices focus on preventing people from falling into persistent debt.”
Richard Pike, Phoebus Software sales and marketing director, says “Today’s figures from the Bank of England are of course encouraging. Anything that shows growth or even a steady market, has to be better than the alternative. With everything that is going on politically, the economy will always be on the back foot, which continues to cause uncertainty.”
“A degree of stability is what we should be aiming for and looks like it is being achieved.”
Figures also showed that mortgage approvals from May to June increased by 1.5 per cent to 65,619, a five-month high. The annual growth rate of mortgage lending held steady at 3.2 per cent, where the figure has hovered since the end of 2016. The number of remortgages fell from 51,669 in May to 47,895 – a drop of 7.3 percent.