Credit card debt grew at the fastest annual pace in more than a decade in February, as low interest rates encouraged Britons to binge on cheap credit.
Borrowing on credit cards and personal loans rose by £1.4bn last month, according to Bank of England data.
While this was below the six month average of £1.6bn, it was higher than expectations of £1.3bn. Upward revisions to January’s borrowing figure also kept the annual pace of growth at 10.5pc.
Credit card debt rose to a fresh record of £67.3bn in February, while the annual pace of growth climbed to 9.3pc – the fastest pace since February 2006.
The Bank of England has announced that its main banking regulator is conducting a review into lending standards as policymakers attempt to ward off a consumer debt bubble.
Record low interest rates and action by policymakers to boost lending in the wake of the Brexit vote have helped to drive consumer borrowing costs down.
Bank data show the interest rate on a £10,000 unsecured loan dropped to 3.66pc last month, the lowest rate since records began in 1995.
Mark Carney, Governor for the Bank of England, has warned that a broader “easing of credit standards” on unsecured lending posed a potential risk to financial stability.
This includes a marked rise in interest-free periods on credit card balance transfers, which have lengthened to up to 40 months in some cases, he said.
Policymakers will be monitoring credit growth closely as higher inflation erodes real incomes and contributes to a slowdown in the economy.
The Bank will review the findings by the Prudential Regulation Authority “over the coming months”, which could lead to tighter lending criteria.
The Bank of England data also showed mortgage approvals dipped to 68,315 in February, from 69,114 in January, suggesting that housing market activity remains subdued