Consumer credit growth rate at its highest since 2019

This is the highest rate since March 2019. The annual growth rate of credit card borrowing, meanwhile, was 13% - while other forms of consumer credit were at 4.5%.

These were the highest rates since October 2005 and March 2020, respectively. Responding to this, Equifax UK’s chief data and analytics officer Paul Heywood, said these increases are due to the fact that the most vulnerable have “run out of quick fixes”. 

He added: “They have cancelled recurring subscriptions, swapped to less expensive supermarkets, and reduced spending on clothes, food and holidays. Yet households are still struggling to make ends meet in the face of falling real pay.

“It’s not just the vulnerable who are struggling. Our data shows a growing number of those on higher incomes are dipping into their savings to make up for the shortfall in disposable income. 

“At the same time, we’ve seen levels of credit card borrowing balloon at the fastest rate since the mid-2000s. We expect this trend to remain on an upward trajectory, as the rising price of essential goods like energy and food persists well into the New Year. 

“Most lenders would like to offer affordable credit to those that need it most, but when there’s this much economic uncertainty in the air, there’s always a temptation to focus on prime borrowers. 

“At times like this, better data is the key to more informed affordability decisions, giving lenders the confidence to say yes to more people, more often, and give those in need the credit they deserve.” 

Overall, individuals borrowed an additional £1.4bn in consumer credit - following £1.8bn of borrowing in June. This is above the 12-month pre-pandemic average up to February 2020 of £1bn.

Despite this, households deposited an additional £4.3bn with banks and building societies in July - up when compared to the £2.6bn seen in June. Within the household deposits measure, flows into time deposits remained strong at £2.8bn - which is the highest since November 2010.