Business

Consumer borrowing in biggest surge since 2008

Bank of England Image copyright PA

Consumer borrowing surged by £1.2bn between February and March, the largest rise since the financial crisis, according to figures from the Bank of England.

The biggest increase was in unsecured borrowing, such as bank loans and overdrafts.

That accounted for £1.1bn of the overall rise, which was the highest figure since February 2008.

By contrast, mortgage and credit card lending was broadly flat.

The number of mortgages approved in March was 61,341, a small fall from 61,523 in February.

Credit card lending increased by just £200m over the same period.

Debt

One reason for the rise in bank loans is likely to be record low borrowing rates.

A year ago, anyone borrowing £5,000 would have had to pay 9.1%, according to the website Moneyfacts.

Now the same amount can be borrowed for 8.1%.

Last week the debt charity StepChange warned that increased borrowing might eventually result in increased debt.

Following the latest figures, one economist repeated that concern.

"March's sharp rise will likely fuel concern that consumers will pile up debt again to fund spending," said Howard Archer, the chief European and UK economist with IHS Global Insight.

But earlier this week, the Insolvency Service reported the lowest number of personal insolvencies since 2005.

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