Consumer borrowing surges ahead of forecast rate rise

NEW figures from the Bank of England have revealed that consumer lending rose 9.9 per cent in September compared to the same month last year.

Data from the central bank, released on Monday, showed that net consumer credit increased by £1.6bn last month, above the average monthly increase of £1.5bn over the past six months.

Read more: Credit boom will leave households vulnerable when rates rise

Uptake of personal loans has grown by 10.3 per cent year on year, while credit card debt has risen by 9.2 per cent over the period.

Mortgage lending saw a more modest increase, growing by 3.2 per cent compared to September last year, with approvals for house purchases actually falling on an annual basis.

The Bank of England has recently highlighted its concerns around the rise in consumer credit, as well as mandating banks to set aside extra capital in case of defaults.

Figures within the P2P industry have also admitted concern around whether the pricing of personal loans by platforms is sustainable, in the battle to attract borrowers.

The Bank of England is expected to increase the base rate this week, which would be the first increase since 2007, as it seeks to stem the tide of rising inflation.

Read more: Bank of England urged to delay base rate rise