Unsecured debt rises at fastest pace in nearly five years

Unsecured debt rises at fastest pace in nearly five years

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The cost of living is straining the household finances, as the U.K. consumers took on unsecured debt at the strongest pace in almost five years.

In February, the Bank of England said that borrowing on credit cards and personal loans jumped by 1.9 billion pounds $2.5 billion. That is 1 billion pounds more than expected and up from a revised 143 million pounds in January.

The cost of everything from fuel to food and clothing is rising faster than wages, with inflation growing at its fastest pace in three decades. That is putting a historic squeeze on living standards and forcing consumers to borrow to pay bills.

The figures show new mortgage approvals fell to 71,000 in February from a revised 73,800 the month before, an indication that the housing market may be losing some of its recent heat. The mortgages approved fell to 4.7 billion pounds from 5.9 billion pounds.

The cost of borrowing remains close to its lowest level since December despite three interest rate increases from the BOE since December. The effective rate on new mortgages rose by just 1 basis point to 1.59% in February.

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