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Analysis: Net consumer credit borrowing returns to pre-covid level

Consumers showed a greater appetite to borrow in July, according to Bank of England data that reveals household net borrowing reached £3.9bn, as both mortgage and consumer credit borrowing increased.
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The latest Money and Credit statistical release published today (September 1), shows that net consumer credit borrowing was positive in July, after an additional £1.2bn of consumer credit was borrowed compared to June. Gross repayments in July were 20% below the pre-covid level.

 

According to the Bank of England, the mortgage market showed more signs of recovery in July but remained weak in comparison to pre-Covid. Net mortgage borrowing in July increased to £2.7bn from £2.4bn in June.

 

Taken together, the net consumer credit borrowing and net mortgage borrowing figures showed that overall, net household borrowing recovered in July as households borrowed an extra £3.9bn of all loans during that month.

 

The Money and Credit data also showed that UK private sector businesses borrowed a total of £3.1bn from financial markets in July and repaid £3bn of bank loans. According to the central bank, this was the smallest amount raised since early 2020.

 

StepChange Debt Charity head of policy, research and public affairs, Petter Tutton, said: “For the first time in some months we are seeing household borrowing outstrip repayments, at a time when emergency support measures are winding down. It’s absolutely vital that we see ongoing support to help people get through the next period, whether they are in employment or not, if we are to avoid entrenching problem debt as a long-term legacy of the pandemic."

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