Consumer debt rises as inflation creates financial pressure on households

The trade association UK Finance has revealed that credit card borrowing rose by 7.8% in 2017 compared to 2016.

The annual growth in consumer credit rose 1.5% in September 2017, which includes credit cards, overdrafts and personal loans.

One factor in this increases is the rise of inflation to 3%, the highest for 5 years. This has put financial pressure on many households.

Last month, the Bank of England’s Financial Policy Committee (FPC) said that lenders were underestimating the risks that household debt can cause. Lenders base lending decisions on present conditions, so if inflation continues to rise and interest rates also increase, it is possible that this could cause borrowers to default on their credit repayments.

The FPC estimates that lenders could lose up to £30bn if there is a downturn in the economy. This is £10bn more than the previous prediction from the FPC.

Mortgage lending was at £21.4bn in September 2017, representing a growth of 5% compared to 2016.

In contrast to the growth in personal debt, business borrowing slowed in September 2017. Businesses remain cautious because of economic uncertainty, perhaps partially caused by Brexit.

There has been a 2% increases in personal bank deposits in September, but this compares to a 2.2% increase in August.

Wirral households under financial pressure have a number of options to deal with money issues. Independent financial advice is available from Endeavour Financial Planning to help families work towards a prosperous financial future.

Source used: http://www.wirralglobe.co.uk/news/national/15618244.Credit_card_borrowing_rises_amid_consumer_debt_focus/

Posted by Alan
6th November 2017

Disclaimer

All blogs and news on Endeavour Financial Planning are for information purposes only and are not intended to provide advice. Please seek the advice of a financial advisor before making any financial decisions.

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