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House Loan Borrowing Nears £1Trillion

The Bank of England has released figures that reveal the UK’s level of mortgage debt is almost a staggering £1trillion.

With most Britons comfortable with their level of debt, April saw total net mortgage lending rise by £8.5bn. The total figure of debt owed on property was £999.2bn, according to the bank.

Ironically, the rise comes at a time when the mortgage market saw a slowdown in mortgage lending in that month. April saw 8,000 less home loans approved than in March, giving a figure of 106,000 for April. That month also saw a fall in the number of loans approved for remortgaging.

Britons are currently saddled with unprecedented levels of personal debt, with some £191.5bn owed through various forms of loans, credit cards and overdrafts. The UK’s level of debt now stands at almost £1.2 trillion. While most of this debt is in the form of mortgages, levels of unsecured personal and credit card debt have risen dramatically in the last five years.

April saw credit card lending increase by £400m, up £300m on March, while loans and overdrafts almost doubled on the previous month, rising by £500m.

Chief economist with Global Insight, Howard Archer, said: “ The softer mortgage data from the Bank of England follows on from the Nationwide reporting that house prices rose only modestly for a second successive month in May.

“ We suspect that the upside for housing market activity will be limited over the coming months by the significant overall firming in house prices in recent months, as well as by monitoring buyer concerns that interest rates could start to rise sooner rather than later.”

Mr Archer was also of the opinion that the coming months would see house prices rise modestly, cementing an already robust housing market.

However, the mini-boom that the UK housing market is currently enjoying is showing signs of slowing down with talk of rising interest rates, according to Nationwide.

Nationwide group economist Fionnuala early said: “ Since April, the change in rates corresponds to the impact of an actual quarter-point hike in the base rate.

“ Tracker mortgage rates tied to the base rate, by definition, remain unchanged, but additional talk of rate hikes is still likely to affect borrower sentiment, particularly when there are increasing reports of job losses and consumer confidence is fairly subdued,” she added.


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