Consumers borrow more amid rising pressure on personal finances
Consumers borrowed an additional £1.6bn in January, while mortgage lending fell, as the cost-of-living crisis escalates.
Fresh data from the Bank of England found that consumers borrowed double the amount they did in January – the highest figure since June 2022.
The additional consumer debt in January was split between £1.1bn of borrowing on credit cards, rising from £200m of net repayments in December, and £500m of borrowing through other forms of consumer credit, such as car dealership finance and personal loans.
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Meanwhile, mortgage lending to individuals decreased to £2.5bn in January from £3.1bn in December.
Mortgage approvals for house purchases fell to 39,600 in January from 40,500 in December, the fifth consecutive monthly decrease. Excluding the pandemic period, this was the lowest approvals since January 2009.
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“Borrowing was up again in January, with a worrying amount of people relying on the plastic in the face of the soaring cost of groceries, which has risen to yet another record high, as well as higher energy bills,” said Myron Jobson, senior personal finance analyst at Interactive Investor.
“January is typically a bleak month for many after the expense of Christmas and New Year – all while inflation and cost of living is at a high.
“Many of those who have no room in the budget to make further cuts are forced to borrow to tide them over. They will have to keep a watchful eye on their finances to avoid debt spiralling out of control.”
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