The bank of England has confirmed that the level of personal debt in Britain has fallen for the first time since 1993, when records began. The news has been welcomed by debt advice providers as proof that UK consumers are taking their personal debt more seriously and beginning to reign in their spending.
The current level of personal debt in the UK now stands at £1.457 trillion, as personal borrowing declined by £600 million in July. The drop consisted of a fall back in mortgage borrowing as well as a reduction in other borrowing, such as personal loans and credit card debt.
Contrary to what the figures suggest, the number of mortgages agreed in July actually rose, indicating that property sales and values may be set to rise. Outstanding balances on mortgages fell by £400 million as consumers repaid more money than they borrowed over the month.
Consumer credit, which includes HP agreements, personal loans and credit card debt fell by £200 million during the month. This is despite the fact that borrowing on credit cards actually increased by £92 million in July.
Since the start of the economic downturn there has been an increase in the number of consumers that have suffered financially. Nathan Gladwell, of Chiltern Debt Management was upbeat about the news, saying “It’s good to see that the public are beginning to get to grips with personal debt levels.
“This is the first decline in personal borrowing since records began, so it is still early days. One can only hope that the trend continues and we see a reduction in the number of UK consumers suffering with debt problems.”