Fears as BoE shows consumer borrowing has soared

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Fears as BoE shows consumer borrowing has soared

Concern has been raised at the current level of borrowing by individuals, as shown in the latest figures from the Bank of England.

The BoE’s ‘Money and Credit: October 2015’ report showed total lending to individuals rose by £4.8bn in October, above the six-month average increase, leaving the total amount outstanding at £1.455trn.

Consumer credit increased by £1.2bn in October, with consumer credit growth over the last year at 8.2 percent – the fastest pace since 2006.

Credit card lending rose by £300m in October, in line with average monthly increases.

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline said: “These figures confirm that we are in the middle of a significant and prolonged rise in borrowing by households, with consumer credit now growing at its fastest rate since 2006.

“While many will be able to service this extra borrowing, we remain concerned that a minority are turning to credit to make ends meet.”

The number of mortgages rose to 69,630 in October, with the value of new mortgage approvals at £12.2bn.

Richard Pike, sales and marketing director at Phoebus Software, IT systems provider to lending institutions, said: “The number and value of mortgage loans over the last three months, as reported by the Bank of England, has been fairly consistent.

“However, at £19.7bn the value is 10 per cent lower than the £21.8bn estimated for October by the CML earlier this month.

“I will be interested to see how these figures compare when the CML’s statistics are confirmed in December, and where the differences lie. The value of loans in August, for instance, was lower than in October but higher in number, so will it be number or value, or both?”

Adviser View

Peter Matthew, managing director of Cornwall-based Jacksons Wealth Management, said: “I don’t think increased borrowing is an issue, and we shouldn’t worry about people borrowing more as long as it is responsible.”