Borrowing grows as living cost crisis bites

Household borrowing grew in January at the fastest annual rate since the start of the coronavirus lockdowns, according to new figures.

The Bank of England said the annual growth rate for non-mortgage borrowing – using various forms of consumer credit – accelerated to 3.2% in January.

This is up from 1.5% and the highest annual growth rate since March 2020, when the increase was 3.7%.

The figures includes borrowing using credit cards, personal loans, overdrafts and car finance.

Within the January total, the annual growth rates of credit cards and other forms of consumer credit were 6.2% and 2.0% respectively.

The Bank's Money and Credit report also said that around 74,000 mortgage approvals were made in January - the highest total since 75,900 approvals were recorded in July 2021.

Re-mortgaging approvals also increased, to 46,200 in January - the highest since 52,300 approvals for re-mortgaging were recorded in February 2020.

The figures also show households deposited £7.8bn into banks, building societies and NS&I accounts – lower than the average of £9.4bn deposited per month over the previous year, although still higher than the average of £5.5bn deposited each month in the run-up to the pandemic.

Paul Heywood, of Equifax UK, said that expected interest rate rises and a cost of living crisis were putting the squeeze on consumers, adding:they’re beginning to tighten their belts and a steadily increasing number are even falling behind on their loan repayments, especially with consumer credit."