The bank’s research revealed that credit card borrowing grew at its slowest recorded rate of 4% in 2006, which was below the level of inflation, and unsecured personal borrowing also saw its slowest growth rate since 1994.
In addition to this, the research indicated that since July 2006, households with mortgages have reduced their unsecured borrowings by an average of 3%. In contrast to this, households without a mortgage have continued to use their credit cards and take out loans, but at a slower rate in comparison to the past.
Other findings include a rise in income against a decline in interest rates on credit cards and loans. As a result, despite the increase in base rate in January, the research has shown a decrease in the sensitivity to interest rates.
Chris Rhodes, Alliance & Leicester’s director of retail banking commented: We have entered 2007 with a reduced appetite for borrowing and house buying since last summer. Our latest survey suggests that another base rate rise could cool the housing market further.
