Bank will keep a close eye on levels of household debt
Bank of England governor Mark Carney has made clear he has concerns about the high levels of debt in a growing number of UK households.
In particular, Mr Carney has issued a blunt warning about the dangers of increased borrowing on credit cards and other forms of unsecured debt.
Figures from the BoE, published earlier this week, found that credit card lending has now hit record levels, increasing by £571million in the last month.
Of equal concern is the fact that unsecured debt is now rising at the fastest rate for more than a decade.
In a press conference on Wednesday, Mr Carney revealed that the overall ratio of household debt to income was recorded at 133 per cent in the second quarter of 2016.
This is high, although not quite at the level reported during the height of the financial crisis.
“We are going to remain vigilant around the issue, because we have seen this shift,” he told journalists.
The current situation means that rules that the BoE had previously imposed in relation to “risky” mortgage lending will remain the same as for the past two years.
Since June 2014, lenders have been unable to lend more than 15 per cent of their loan book to people who are borrowing in excess of 4.5 times their annual income.