Alarm as mortgage borrowing plunges and credit card debt soars


mortgage borrowing collapsed, but credit card debt rose sharply in April, a worrying sign that households are feeling the pinch in the cost of living.

The latest figures from the Bank of England (BoE) show net mortgage borrowing fell sharply from £6.4bn to £4.1bn. Mortgage approvals for home purchases fell from 69,500 to 66,000 during the month.

However, net consumer credit fell from £1.3bn to £1.4bn as credit card debt climbed 11.6%, the highest since November 2005.

Experts said the figures suggest home buying decisions are being postponed as more families are forced to use credit cards to make ends meet.

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Andrew Montlake, managing director of mortgage broker Coreco, said: “This latest rise in consumer credit will set off even more alarm bells at the Bank of England.

“It shows that the economic storm clouds are darkening day by day. People can take out credits and loans if they are confident, but in this case it is almost certainly because they are looking for extra money to cover their bills and put food on their tables.

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“The drop in mortgage approvals is surprising as April and May were exceptionally busy, although we expect the combination of weaker borrower sentiment and lenders tightening their financial capacity to ripple through the months coming.”

Steve Seal, boss of Bluestone Mortgages, said: “Despite a decline in mortgage lending due to the current inflationary environment, it is clear that the dream of home ownership lives on. However, as the cost of living crisis continues to weigh on household and personal finances, we expect to see a growing cohort of customers shut out of the traditional mortgage market.

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Jonathan Samuels, CEO of lender Octane Capital, said: “While our unquenchable thirst for home ownership remains, we are starting to see many lenders reign in the range of products they offer, as well as the rates they offer. they are ready to offer them. at.

“The consequence of this is naturally going to be reduced buyer activity through the mortgage industry, as many buyers are now finding that they simply cannot secure the home they want, with a mortgage that suits their needs. financial situation.”



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