Britons borrow £43bn in debt binge

BRITISH consumers’ appetite for debt appeared undiminished during February, with mortgage lending increasing by its strongest amount for four months.

Also, a record £18.03 billion was borrowed through credit cards, overdrafts and loans, according to the Bank of England.

The rise in borrowing came despite interest rates rising by 0.25% at the beginning of February, following a quarter-point increase in November.

Mortgage lending totalled £25 billion during the month and after redemptions and repayments were taken into account, outstanding mortgage debt rose by £8.98 billion, the highest rise since October last year.

“It (the figures) demonstrate the amazing buoyancy of mortgage demand,” said Philip Shaw, chief economist at Investec.

“Although we have seen two interest rate increases since the autumn, households remain relatively impervious to higher borrowing costs. It proves that 4% is still a low base rate.”

Mortgages worth £26 billion were approved during February, above the £25.79 billion approved in January, but slightly below the recent average.

Around 118,000 loans were approved for house purchase, compared with an average of 122,000 in the three months to the end of January.

During February, Britons borrowed a record £11.68 billion on credit cards and £6.34 billion through loans and overdrafts.

After repayments were taken into account unsecured lending increased by £1.73 billion.

Although this was down on January’s figure of £2.01 billion, it was the second-highest monthly increase recorded since May last year.

Within this figure credit card lending rose by £512 million, compared with arise of £741 million the previous month, to give Britons a total outstanding debt on plastic of £53.11 billion.

Other unsecured lending increased by £1.22 billion, the second-biggest increase on record, to £119.19 billion.

Many analysts are predicting the central bank could raise rates again as soon as next week as there has so far been little evidence that consumers are reacting to higher borrowing costs.

“The figures remain strong. Consumers seem impervious to the two rate increases we have had so far.

“With personal borrowing near the top of the Bank of England’s agenda, rates are likely to rise again,” said Mr Shaw.

“On balance, we see the next rate hike in May but it is impossible to rule April out.”

And in a sign that the housing market is likely to remain strong for some time yet, mortgage approvals, loans agreed but not yet made, totalled 118,000 in February.