Large upswing in consumer borrowing

The country's appetite for consuming is on the rise says the Bank of England
The country's appetite for consuming is on the rise says the Bank of England

Consumers’ borrowing on personal loans, overdrafts and credit cards surged by £1.2 billion in March - marking the strongest growth seen since 2008, Bank of England figures show.

The upswing compares with an average increase in consumer credit of £900 million over the previous six months, as well as being the largest increase seen since February 2008.

The sharp increase in consumer credit borrowing was fuelled by a £1.1bn increase in borrowing on personal loans and overdrafts, which was also the largest upswing seen in this type of borrowing since February 2008.

Also within the £1.2bn increase seen in consumer credit in March, credit card borrowing increased by £161m. This was in line with the average growth seen in credit card borrowing over the last six months, the Bank said.

Meanwhile, 61,341 mortgage approvals - with a collective value of £10.2bn - were made to home buyers in March, marking a 0.3 per cent fall compared to February.

Some recent studies have pointed to a pause in the housing market while house hunters and sellers await the outcome of the General Election.

According to financial information website Moneyfacts, average personal loan rates fell to a record low in February this year.

Moneyfacts said that a year ago, the average rate on the market for someone looking to borrow £5,000 over three years was 9.1 per cent. By February this year, that had fallen to 8.1 per cent - the lowest average rate since the website’s records started in 2007. The average rate for this type of loan has edged up slightly since February, to 8.4 per cent.