UK household debt rockets, setting off alarm bells
As UK Chancellor George Osborne focuses on reducing the national debt, household debt has jumped 8.2% YoY, the biggest increase since 2006, according to Bank of England data. Borrowing has been buoyed by low interest rates offered by fiercely competitive lenders and high consumer confidence, however, national charities have voiced concerns that increasing numbers of people will service these unsecured debts by taking on more credit, hence they are calling on the government to intervene.  

Brits borrowed £1.2billion in October, and we're stacking up the debt at the fastest levels since 2006. That's not even including our mortgages

Brits are taking on everyday debt at the fastest rate for nine years.

Bank of England data out shows people lumbered with another near £1.2billion of unsecured credit - everything from credit cards to personal loans - last month.

The figure was up 8.2% year-on-year and the biggest jump since 2006.

Households have taken advantage of historically low interest rates to borrow on credit, fuelled by a boom in car buyers taking out loans.

Meanwhile, stores used Black Friday and Cyber Monday to encourage people to spend extra, with billions more borrowing due in the run-up to Christmas.

Last month’s rise took the total amount of unsecured credit Brits were left owing to a five year high of more than £177bn.

The amount excludes mortgage lending, which jumped £3.6bn last month, the fastest rise since April 2008.

Taken together, Brits now owe £1.45trillion in mortgages and consumer credit.

The Bank of England, which will carry out stress tests on big banks’ finances on Tuesday, is split on whether rising debt levels are a worry.

Deputy Governor Ben Broadbent has said the recovery isn’t debt-fuelled but chief economist Andy Haldane recently warned consumer credit was expanding at a “rate of knots”.

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline said: “While many will be able to service this extra borrowing, we remain concerned that a minority are turning to credit to make ends meet.

"There remains a significant number of households who are just about getting by, and an increase in debt repayments could tip many into financial difficulty.”