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Credit card debt and mortgage approvals hit four-year highs Credit card debt and mortgage approvals hit four-year highs
(35 minutes later)
Credit card debt is growing for the first time in four years, while mortgage approvals have reached levels not seen since the depths of the economic crisis, in further signs that borrowing is helping to haul the UK economy out of recession.Credit card debt is growing for the first time in four years, while mortgage approvals have reached levels not seen since the depths of the economic crisis, in further signs that borrowing is helping to haul the UK economy out of recession.
This year will be the first since 2009 that household borrowing on unsecured credit has grown, with credit card debt up £76m in August, according to the British Bankers' Association.This year will be the first since 2009 that household borrowing on unsecured credit has grown, with credit card debt up £76m in August, according to the British Bankers' Association.
The unleashing of consumers' plastic comes as UK mortgage approvals hit their highest since December 2009. A total of 38,228 loans were approved for house purchase in August – up from 37,428 in July – while 22,665 homes were re-mortgaged, the highest rate of refinancing since 2011. The unleashing of consumers' plastic comes as UK mortgage approvals hit their highest since December 2009. A total of 38,228 loans were approved for house purchase in August – up from 37,428 in July – while 22,665 homes were remortgaged, the highest rate of refinancing since 2011.
"These figures suggest that consumer confidence is growing," said David Dooks, the BBA's statistics director. "For the first time in four years annual growth in household borrowing on credit cards and personal loans has turned positive and mortgages approved for house purchase are also at their highest level since 2009.""These figures suggest that consumer confidence is growing," said David Dooks, the BBA's statistics director. "For the first time in four years annual growth in household borrowing on credit cards and personal loans has turned positive and mortgages approved for house purchase are also at their highest level since 2009."
But business borrowing continued to contract, although lending to small and medium-sized companies stabilised, suggesting that the worst of the credit crunch is easing. The BBA reported that overall lending to non-financial business fell by £0.6bn in August, a smaller drop than the monthly average of £1.2bn. But business borrowing continued to contract, although lending to small- and medium-sized companies stabilised, suggesting that the worst of the credit crunch is easing. The BBA reported that overall lending to non-financial business fell by £0.6bn in August, a smaller drop than the monthly average of £1.2bn.
Howard Archer, chief UK economist at IHS Global Insight, said the fall in real wages may mean people are having to borrow more to finance major purchases. However, he said demand for unsecured credit was low compared with levels seen before the crisis. "The overall impression is that the consumer appetite for taking on new borrowing is still relatively limited while many consumers remain keen to reduce their debt."Howard Archer, chief UK economist at IHS Global Insight, said the fall in real wages may mean people are having to borrow more to finance major purchases. However, he said demand for unsecured credit was low compared with levels seen before the crisis. "The overall impression is that the consumer appetite for taking on new borrowing is still relatively limited while many consumers remain keen to reduce their debt."
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