UK consumers to borrow more on credit cards despite increase in loan defaults
Consumers are expected to increase their use of credit cards and other forms of borrowing in the coming months, according to a Bank of England survey of the country’s lenders.
The news is adding to indications that the UK economy is recovering after a shaky start to the year. But it also comes as the same survey reveals that default rates have increased and are expected to go up even further, especially on credit card loans and other unsecured lending.
The Bank of England’s latest Credit Conditions Survey reports lenders are expecting demand for credit card and other forms of unsecured borrowing to increase in the next three months.
It also reports that household demand for remortgages is forecast to continue to increase after healthy growth in this form of secured borrowing in the last quarter.
The Bank of England has been encouraging banks to be careful about lending to households, but its report indicates that lenders are intending to keep their supply of mortgages broadly steady in the coming months.
The housing market in the UK has been struggling to pick up any momentum for the past year. This is due in part to the squeeze on consumers from both a rise in inflation since the 2016 Brexit vote and the weakness of wage growth.
The Royal Institution of Chartered Surveyors (RICS) is expecting the market for homes to remain sluggish in the coming months even though more properties are being put on the market. Sales activity was subdued in June, according to the latest RICS UK Residential Market Survey.
The survey indicates that London’s housing market is the most likely to remain weak. In contrast to much of the rest of the country, prices are not expected to rise in either the capital or the surrounding south-east region.
Lenders in the Bank of England survey pointed out that while demand for small business loans had increased in the past three months, the expectation was that demand for loans from large businesses would fall in the coming quarter.
If you are thinking of increasing your borrowing with your credit card, finder UK’s free credit card comparison can help you find the best card for you. The comparison is organised by card type, features and provider.
You can also check out our credit card report, put together using data from the UK Cards Association and the Bank of England.
To find the right online loan, whether you want to buy a car, consolidate your debts, make some home improvements, pay for a wedding or anything else, you can learn about the different options available with our loan guide.
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