Findings from the lender showed that while mortgage borrowing continued to grow at a rapid pace, consumer appetite for personal loans and credit card debt declined. Credit card borrowing grew 4 per cent last year – the slowest rate on record – while unsecured personal borrowing grew at its slowest rate since 1994.
Since July 2006, homeowners have reduced their unsecured borrowing by an average of £197. In contrast, the study found that households without mortgages continued to take out loans and use their credit cards, but at a slower pace, increasing their unsecured debt by an average by £98.
Chris Rhodes, managing director of retail banking at A&L, said: “It is a much bigger decision to buy a home than to remortgage your existing home. We have entered 2007 with a reduced appetite for borrowing and house buying since last Summer. Our latest survey suggests that another Base Rate could cool the housing market further.”
Phil Perry, director at ARK Financial Planning, said: “Although interest rate hikes will have slowed down certain buyers from upgrading, in this day and age most people who want to move and get an extra room or two will stretch their finances, so long as it remains in the realms of affordability. As for releasing equity in property, I would agree there has been a slowdown in this market, but I’m not certain whether this is to do with the interest rate hikes or the fact that it is hard to get advice on these products.”
