Consumer credit roars ahead as mortgage lending growth remains low

Households in the UK took on an extra £420 in credit card and other consumer credit in the year to June 2015, analysis from the Money Charity shows – the largest percentage rise in total consumer credit since 2005.

Households now have an average of £6,454 in consumer credit, up from £6,034 a year ago. This represents a 7% rise in the total, a figure that would see consumer credit double in a decade.

By contrast, total secured debt rose by only 1.7%, a slight pick-up on the last few years, but far below the double-digit increases of the early 2000s. With Halifax telling us that house prices rose at 9.6% over the same period we might expect larger rises in mortgage lending.

Annual Change in UK Credit (to June)

The size of first-time buyer loans increased by 3.7% in the year to May, but total mortgage lending was at £45.6 billion in the first quarter of 2015, less than half the 2007 peak. We are seeing a fall in the number of mortgage holders – 6.9 million households (31%) with a mortgage is the lowest level since the late 1980s.

House prices and mortgage sizes are rising, but fewer people are borrowing to buy their home.

Michelle Highman, Chief Executive of The Money Charity, said:

“Consumer credit is rising fast at the same time it would appear that fewer people are able to buy their own homes. Research from our Money Statistics tells us that private renters spend 41% of their income on housing, while homeowners spend 19%.

Consumer credit can be part of responsible financial planning, but increasing unsecured debt combined with high costs of rented housing is definitely a cause for concern.

Careful planning is the best way to ensure that you get un top of your money, now and in the future. Make a start with a tool like our free Budget Builder. If you can do that, you can start making your money work for you and achieve your goals!”

Other figures in August’s edition of The Money Statistics include:

  • In Q1 2015, households in the UK spent £82.80m a day on water, electricity and gas – or £3.10 per household per day
  • There were 19,008 individual insolvencies in England and Wales in Q2 2015. This is equivalent to 209 people a day or, one person every 6 minutes 53 seconds. This was a fall of 6.5% on the previous quarter and 29.5% on the same period a year ago.
  • The average interest rate for an instant access savings account – not including bonus interest payments – was 0.38% in April. For a cash ISA, this was 0.86%.
  • In the three months to May 2015 pay including bonuses was up by 3.2% from a year ago, and pay excluding bonuses also rose by 2.8%. Average weekly pay was £492, or £462 excluding bonuses – an annual salary of £25,584, or £24,090 without bonuses.


Get the full picture in The Money Statistics or download the full report in PDF format.