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The UK’s retail banks are expected to slow down the supply of unsecured credit to British consumers in the middle of the year, according to the Bank of England, which has warned over the state of the country’s current borrowing boom.
Lenders told the BoE that demand for unsecured credit dipped at the start of the year and is forecast to decrease further over the next three months, according to the central bank’s latest credit conditions survey.
British households have been loading up on debt over the last year pushing the pace of credit expansion to its fastest level since before the financial crisis in 2005. Unsecured lending is made up largely of credit card loans in the UK.
Mark Carney, governor of the BoE, has said the central bank is keeping a “close” eye on debt levels, amid evidence that the UK’s savings rate fell to the lowest on record at just 3.3 per cent at the end of last year.
The BoE survey also reported that weak business investment was posing a “significant drag” on companies’ demand for loans.