UK credit card borrowing hits a record as consumers squeezed

Bloomberg

UK credit card borrowing jumped at its strongest pace in records dating back to 1993, adding to evidence that a surge in the cost of living is straining household finances.
Borrowing on charge cards rose 1.5 billion pounds ($2 billion) in February alone, the Bank of England said. That drove up the value of unsecured credit including personal loans by 1.9 billion pounds, a five-year high and a full 1 billion pounds more than economists had expected.
With inflation growing at its fastest pace in three decades, the cost of everything from fuel to food and clothing is rising more quickly than wages. That’s putting a historic squeeze on living standards and may be forcing consumers to borrow to pay the bills.
The figures also showed new mortgage approvals slipped to 70,993 in February from a revised 73,841 the month before, an indication that the housing market may be losing some of its recent heat. The value of mortgages advanced falls to 4.7 billion pounds from 5.9 billion pounds.
The surge in consumer credit to its strongest since March 2017 came in a month when retail sales fell, and borrowing on credit cards accounted for 80% of the overall increase.
In a further sign of strain on family budgets, the amount households deposited with banks and building societies dropped to 4 billion pounds from 7.2 billion pounds in January.
Debt remain affordable for now, with the cost of borrowing near its lowest on record despite three interest-rate increases from the BOE since December. However, the BOE is expected to deliver several more rate hikes this year to bring down inflation.
The effective rate on new mortgages climbed just 1 basis point to 1.59% in February, showing the intense competition between lenders.