Consumer appetite for credit grows

Posted by Arron Dickens in Credit Crunch on 9 October 2013 - Arron is a Product Manager at checkmyfile

The British Bankers Association (BBA) has indicated that unsecured borrowing has started to pick up for the first time since before the recession.

After years of restricted household spending and more stringent lending criteria by the mainstream financial institutions, the tide appears to be turning.

Borrowing on unsecured credit increased by £76 million in August, which was the first increase in over four years. Those using credit generally took a cautionary approach during the downturn, with net borrowing being offset by consumers paying down their debts.

The BBA has said that repayment of debt still exceeded ‘new’ borrowing, but at a slower rate than previously. It has suggested there is also a greater choice of products now available to consumers.

"Demand for unsecured credit is starting to increase due to improving consumer confidence and more competitive offers available," says David Dooks of the BBA.

There is now a greater appetite for mortgages, loans and credit cards than we have seen in the last few years, as confidence in the economy starts to grow. Indeed there was an additional £8.4bn of new credit card spending in August alone, up from an average of £7.8bn in the preceding 6 months.

A separate report released by Lloyds Bank has found that consumer confidence has risen to its highest levels in at least two-and-a-half years.

The housing market has seen a similar boost over the summer, alongside the unsecured borrowing figures. The number of mortgages approved by high street banks was 38,228 in August, representing an increase of 2.1% on the previous month alone. Government schemes such as Funding for Lending and Help to Buy are helping first time buyers to get on the property market, which is helping to boost the number of transactions now being completed.

Arron Dickens is a Credit Analyst at checkmyfile and has a Bachelor of Arts degree in Business Administration and is an Associate of the Institute of Credit Management. He can be contacted at

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