DEMAND for personal debt remains strong, with consumers borrowing an additional £900m in July while mortgage approvals hit a two-year high.
The growth in consumer credit is broadly in line with the £1bn average over the past 12 months according to the Bank of England’s money and credit report for last month.
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“Today’s figures show that consumers are continuing to turn to unsecured forms of borrowing for financial help,” Dave Harris, chief executive at equity release lender More 2 Life said.
“Our recent research revealed that over a fifth (22 per cent) of the over-55s said they had held credit card debt, and 29 per cent had borrowed to help cover their everyday expenses.
“As the older generation faces longer and more active retirements, but with lower pension pots than the generations before them, not only do they need to take a holistic look at all their assets in retirement but they need to be aware of all their later life lending options rather than turning to unsecure forms of borrowing which may not be the most suitable option for their individual circumstances.”
The Bank of England’s latest statistics also found that mortgage market activity has remained stable although mortgage approvals for house purchase – an indicator for future lending – rose.
Approvals are at their highest level since July 2017 but within the narrow range seen over the past two years, the Bank of England said.
Net mortgage borrowing rose to £4.6bn in July – the highest amount since March 2016, reflecting a fall in repayments rather than an increase in new lending.
The annual growth rate remained at 3.2 per cent, in line with levels seen since 2016.
“Advisers have clearly been doing a stellar job in securing the best possible outcomes for customers and contributing to today’s mortgage approval figures,” Toni Smith, chief operating officer at mortgage network PRIMIS said.
“Planning ahead financially is always going to result in a better result for the end-customer, and it’s great to see that brokers have been able to demonstrate their value to clients in this way.”
Other Bank of England statistics showed that businesses repaid £2.5bn of borrowing in July, the first net repayment since February.
This was mostly driven by a £2bn net repayment to banks. The annual growth rate of bank lending to UK businesses fell to three per cent, down from 4.4 per cent in June.
Within this, the growth rate of large businesses’ borrowing fell to 4.2 per cent whilst the growth of SME borrowing remained stable at 0.8 per cent.