New data published by the British Bankers' Association (BBA) has highlighted an upturn in confidence among borrowers, with growth in the number of…
New data published by the British Bankers' Association (BBA) has highlighted an upturn in confidence among borrowers, with growth in the number of mortgages and personal loans being taken out across the UK.
August witnessed a sharp spike in the level of unsecured borrowing for consumers up and down the country, with a five per cent increase in personal deposits recorded by the organisation for the first eight months of the year.
Furthermore, outstanding levels of unsecured debt grew by 0.3 per cent over the same period, highlighting the need for British consumers to remember the lessons learnt over the last few years and keep their finances in check.
Overall, annual growth in credit card borrowing stood at 6.7 per cent, outweighing increases in both personal loans and overdraft borrowing of 5.1 per cent.
BBA statistics director David Dooks commented: "For the first time in four years, annual growth in household borrowing on credit cards and personal loans has turned positive and mortgages approved for house purchase are also at their highest level since 2009."
These figures highlight the need for consumers to remain vigilant when it comes to handling their money, as while greater access to borrowing can be a good thing, this growing confidence should be tempered with an air of caution.
Many of the issues of recent years arose as a result of unsustainable levels of personal debt accrued during the boom years prior to the economic downturn of 2008. It is therefore prudent for all borrowers to be aware of the serious difficulties they can face if their finances become overstretched.
Credit card spending formed the bulk of unsecured borrowing growth in August, with the BBA's figures revealing £8.4 billion was spent on purchases using this form of easy credit during the month.
While the use of credit cards can be extremely beneficial to fund large-ticket items – as these products can offer greater financial protection – consumers need to be wary of building debts on plastic that will not be swiftly paid off.
By Joe White