Spike in credit card borrowing

The biggest annual growth rate of credit card borrowing since 2005 shows the most vulnerable cannot make any further cuts. Myron Jobson comments on the latest Bank of England Money and Credit report.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Vulnerable consumers living on a bare bones budget simply cannot make any further cuts to expenditure to weather escalating cost-of-living pressures – this is, in part, why we continue to see high levels of consumer debt.

“The annual growth rate of credit card borrowing has soared to its highest levels in 17 years amid the worst cost-of-living crisis in generations. July was a particularly agonising month for our back pockets, with inflation hitting double digits for the first time in 40 years. The cost-of-living crunch is set to go from bad to worst with the recently announced heightened energy price cap for October set to throw household budgets into disarray. Meanwhile, rises in food and petrol and other areas of expenditure is set to tighten the squeeze on households budgets.

“Those with high levels of debt should consider what they can do now to reduce their debts as the cost of credit is only rising just as the prices of everyday essentials are flying."

Remortgage approvals

Myron Jobson says: “It is no surprise that approvals for remortgage increased in July. With the prospect of higher interest rates, and therefore higher mortgage rates, on the cards, homeowners are taking advantage of the last remaining lower rates and looking to lock into a fixed-rate mortgage for as long as their circumstances permits.”