Unsecured lending jumped by 9.1{06aeb1921e0b802d2bd9c766bc98fb11cc6a46c2b0593ed9c88a0e29cf417a34} in January compared to the year before. This marks the largest annual increase in a decade.
Consumers borrowed £1.6bn in January, up from £1.1bn the month before. Bank of England has provided this data.
It is the second-highest level of unsecured consumer debt since June 2005, after November 2015.
The rise in borrowing coincided with the January sales period and this saw Britons “rediscover their zeal for borrowing”, according to Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
This mirrored the trend in November, when the Black Friday sales encouraged spending. During this time unsecured lending rose to its highest level in more than 10 years.
This will raise concerns for policy makers over the increasing levels of personal debt, and the stability of the economic recovery.
Chief economist at IHS, Howard Archer, said: “January’s spike back up in unsecured consumer credit may fuel concern that consumers are borrowing more and saving less to finance their spending.
“Increased consumer willingness to borrow has likely been a consequence of relatively high consumer confidence and extended low interest rates.”
The data provided by Bank of England also revealed UK mortgage approvals hit a two-year high in January.
Mortgage approvals for house purchases climbed to 74,581 in January from 71,335 in December. This is the second-highest level since December 2007.
The figure will have been increased by people rushing to buy property before the 3{06aeb1921e0b802d2bd9c766bc98fb11cc6a46c2b0593ed9c88a0e29cf417a34} stamp-duty surcharge for buy-to-let properties kicks in in April.
Source: Sky News