According to data from the Bank of England, mortgage approvals in the UK have reached a two-year high, with an increase of 3,246 approvals made between December and January 2016.

This increase of consumers taking on credit is causing some concern among debt charities, who believe that it should lead to tighter lending by the central bank.

The Bank of England however have said that it may increase the amount it has set aside for borrowing, in aid to help the economic recovery which is still reliant on spending by households.

This growth in borrowing is seen to have rise, following a growth in consumer credit 9.1%, hitting its fastest pace since January 2006. This is supporting concerns that people are relying too much on overdrafts, credit cards and personal loans to get by, following data that the total amount of consumer credit reached £179.5 billion.

Samuel Tombs from Pantheon Macroeconomics has said;

“British households are back to their old ways and are piling on debt again. With borrowing costs still falling, consumer confidence high and banks willing to lend, indebtedness will only increase unless the Bank of England acts.”

Chief UK and European economist at IHS Global Insight, Howard Archer, acknowledges that the UK’s recovery has been fueled by consumer spending but warns of the possibility that consumers may start relying on excessive debt, whilst also hoping banks do not let their lending standards slip.

 

01/03/2016