Consumer credit growth slows

Consumer credit growth slowed slightly in October, according to the Bank of England, falling to 7.3% from 7.5% in September according to latest data from the Bank of England.

The data showed that over the same period, the annual growth rate for credit card borrowing remained stable at 9.5% with net consumer credit borrowing by households totalling £1.1 billion in October, this is slightly down from £1.2 billion recorded in the previous month.

The Bank of England also warned that half of mortgage holders could see their payments increase over the next three years, estimating that around 4.4 million home loans will see payments rise by 2027. Among those seeing rates rise, the Bank calculates that around 420,000 households will see mortgage costs climb by around £500 per month. However, about 23% will see no change and 27% of borrowers are set to see payments fall. The Bank predicts that about 2.7m homeowners will refinance onto a mortgage rate of over 3% for the first time before the end of 2027.

Commenting on the data, Richard Lane, Chief Client Officer at StepChange, said “Mortgage holders were able to breathe a small sigh of relief over the last few months as the Bank of England cut interest rates two times, and its unsurprising that this is reflected in the number of people securing mortgages. However, it’s important to note that with rates still high compared to a few years ago, many homeowners are struggling to keep on top of mortgage costs and cover all other financial commitments. What’s more, with inflation above the 2% target, there’s no guarantee rates will continue to fall as quickly.

“We’ve seen the amount of mortgage arrears creep up among our own clients this year and it’s a real concern that there could be many more people out there just on the edge of falling behind with payments.  For anyone struggling with ongoing mortgage payments or worried about debt – don’t hesitate to reach out to your creditors and ask for help. Mortgage lenders have a regulatory responsibility to support borrowers who’re struggling and may be able to provide forbearance. StepChange can also support with free and impartial debt advice including mortgage debt advice to those in difficulty.”