Mortgage borrowing slows but credit card spending rises

British consumers collectively pushed themselves ?10.6bn further into the red in January, according to figures released by the Bank of England today.

However, mortgage borrowing actually saw a slowdown, suggesting the threat of further Bank of England base rate increases could be hitting home. The total value of all home loans approved was ?25.7bn gross, ?1.1bn lower than the average in the three months leading to December.

Furthermore, the number of loans for house purchases fell to 110,000, compared with a three-month average of 120,000.

However, unsecured lending didn't take the same knock. Some ?17.9bn was outstanding in unsecured loans, slightly higher than the three-month average of ?17.6bn. Around ?11.8bn of that was on credit cards, compared with ?11.2bn in the previous month. Shoppers spent as much as ?744m on their credit cards in January.

Michael Senior, head of personal lending at The MarketPlace at Bradford & Bingley, said: "Borrowers need to make sure they find a more cost effective way to manage their debts. Transferring expensive credit card or store card debt to those credit cards with good introductory rates, many as low as 0% for 9 months, or restructuring the debt to a personal loan where rates are as low as 6.5%, is likely to benefit the vast majority of borrowers out there."