Credit Demand is Piling Back Up in the UK

More and more people and UK consumers are turning back to credit in order to pay their bills as they struggle with the current economic situation. In fact, for the first time since June of this year more credit and loans were used than the amount of money that was paid back. In all, unsecured credit for consumers rose by as much as 52 million pounds in December alone thanks to increased credit card use.

During most of the economic downturn the trend has been for consumers to save money and pay off their credit card debts instead of saving money due to low interest rates. For five months in a row more money was paid back than was borrowed, but that has come to an end once again. This was primarily thanks to credit card borrowing as it has risen by 195 million pounds in the last little while personal loan and overdraft borrowing was calculated to be around 143 million pounds.

Many people are connecting the increase in borrowing to the fact that consumers want to buy purchases in order to avoid the upcoming increase in VAT. That means that the increase in borrowing should subside once again at a near point in the future.

Total net lending also rose in December of 2009 by about 1.2 billion pounds with the majority of that money going towards mortgages. However, there are still many people seeking help from the use of IVA’s. This has many experts pointing out that the housing market could in fact remain static for the entire year of 2010.

December has always been a slow month in terms of savings as the holidays tend to have people spending more than they usually would, so many experts are simply pointing that out rather than causing any alarm. We will have to wait and see how the trend continues in the early months of 2010 before any patterns can be analyzed or put into place.