Is the Rise of Consumer Borrowing storing up problems for the future?

Personal borrowing is still rising with the average Briton continuing to lean heavily on credit cards, overdrafts and loans. Figures released by the British Bankers’ Association (BBA) show that in December last year the average growth in consumer credit was 6.6% with most of the demand being for low-cost personal loans. The figures from the BBA show that net borrowing rose by £330 million at the end of last year prompting warnings from debt advice charities that many people attracted by continued record low interest rates were “sleepwalking” into debt. But despite the warnings, economic analysts said that the ratio of household debt to income remains manageable precisely because interest rates are so low. They said that interest rates will have to rise significantly if the cost of borrowing is to match that last seen on the eve of the financial crisis in 2008. Other figures from the Council of Mortgage Lenders showed that secured debt reached £20.4 billion at the end of 2016


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