Business

Consumers' mortgage and credit card borrowing 'rises'

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Image caption People's finances remain stretched, with some facing the threat of losing a job

Consumers took a slightly bolder approach to debt in February with increases in mortgage and unsecured borrowing, figures show.

There were 46,967 mortgages approved for house purchases during the month, up 815 on January, the Bank of England said.

Remortgaging rose to a 26-month high as people looked to secure cheap deals.

Unsecured debt rose by £768m in February, driven by an increase in personal loans and overdrafts.

However, the debt increases and mortgage activity remain relatively low compared with before the recession.

Home loans

The number of remortgaging loans approved stood at 35,725 in February, the Bank's figures show.

This was up from 33,972 the previous month, slightly up on a previous high in November, and higher than the average of the previous six months of 31,674.

The figures signal that some homeowners have been signing up to new fixed-rate deals, which are being offered at relatively low interest rates at present.

This might be because their current deals have come to an end, but many would be considering the potential of interest rate rises later in the year.

Some commentators have predicted that the Bank of England will increase the Bank rate from its record low of 0.5% in order to control the rising rate of inflation.

Savings grow

Total lending to individuals rose by £2bn in February, which was higher than the average of the previous six months of £1.1bn, the Bank said.

But in the mutual sector, customers showed some appetite to save following the traditional extra spending at Christmas, according to figures from the Building Societies Association (BSA).

People deposited £150m more into savings accounts than they withdrew in February, compared with a net withdrawal in January.

"Following the usual withdrawal from savings accounts in January as households pay off their Christmas bills, it is pleasing to see a modest increase in savings balances at mutuals in February," said Adrian Coles, director general of the BSA.

"With earnings growing at a slower rate than prices, and imminent rises in some tax rates, it is likely to be difficult for households to substantially increase the amount they save over the months ahead."

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