Loans and overdrafts are becoming more popular
25/03/2015
Loans and overdrafts are becoming more popular as people become more confident in taking them out, according to high street banks.
Annual growth in loan and overdraft borrowing has hit its fastest rate in six years and stands at 4.4%, according to the British Bankers Association (BBA). Consumers are becoming more confident in the UKs banking system again, after the financial crisis. The 2008 crisis led to people being much more cautious about borrowing money from banks, so demand fell.
Experts have now expressed concern that people may be left with a shock rise in payments if interest rates increase from their historic low of 0.5%.
Richard Woolhouse, chief economist at the BBA said:
"Demand for loans and other types of personal borrowing is rising at its fastest rate since the financial crisis"
"Consumers are feeling increasingly confident about buying big ticket items, such as cars or home improvements, as the recovery really begins to take hold."
This week, accountancy firm PricewaterhouseCoopers (PwC) revealed that the average UK family will have £10,000 worth of unsecured debt by 2016 . This could be partly due to the increase in borrowing and current low interest rates. This would be the highest level of debt consumers have ever been in. The current average level of debt in a UK household stands at £8,000.
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