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Consumer debt increases sharply

Consumer debts increased sharply in May, through loans overdrafts and credit cards, according to new figures from the Bank of England.

Unsecured borrowing outstripped repayments by £732 million over the course of the month, higher than the six-month average of £403 million.

Much of this borrowing was driven by loans and overdrafts, while credit card borrowing increased by just £70 million.

Data also indicated that the mortgage market remained subdued, as the number of mortgages approved for house purchases fell slightly in May to 51,098, compared with the previous month.

A spokesperson for Capital Economics said: “May’s decline in mortgage approvals was surely related to the fact that lenders are once again reducing the availability of mortgage credit.

“Against a backdrop of renewed recession in the UK and the escalating crisis in the eurozone, mortgage approvals are unlikely to break out of their rut anytime soon.”

The statistics indicate that the eurozone crisis is having a major impact on homebuyers markets, and is also having a direct impact on the mortgage market. Some homebuyers have even suggested that it has become more difficult to find a mortgage, while others claim it has become more expensive.

This was posted in Bdaily's Members' News section by Ruth Mitchell .