Personal borrowing subsided in July

The UK's personal debt levels are beginning to slow, new figures for borrowing in July show.

11:20 06 September 2004

The UK's personal debt levels are beginning to slow, new figures for borrowing in July show.

The Bank of England (BoE) has revealed that consumers now owe a total of 1.014 trillion, having taken on an extra 10.4 billion of debt in July.

But fewer loans, credit cards and mortgages were taken out in July than in June, when borrowing totalled 11.23 billion.

In July an extra 1.8 billion went on credit cards - compared to 2.2 billion in June - and a total of 8.6 billion was loaned against property in July, compared to 9.3 billion i nthe previous month.

According to the BoE, about 80 per cent of personal debt is in the form of loans secured against homes.

The BoE figures showed that the number of loans approved for house purchase fell from 112,000 in June to 97,000 in July, which suggests the housing market is cooling.

A total of 70,756 new loans were approved in July, down from 88,859 in June and almost 19,000 lower than in the same month last year, the British Bankers' Association (BBA) said.

"We are very near to the 90,000 loans-approved mark, which in the past has indicated house price inflation at or close to zero percent," Ed Stansfield, economist at Capital Economics told BBC News Online.

"We are on the cusp of either a soft or hard landing for the housing market but everything suggests a downturn in house price inflation is taking place."

Steve Pearson, a currency analyst at HBOS said: "Both consumer credit and mortgage approvals, a leading indicator of the housing market, are weaker and this supports the market's view that the UK interest rate cycle is at or near its peak."