Personal debt levels in the UK have fallen for the first time since records began, the Bank of England has revealed. Personal borrowing levels fell by £600 million in July, bringing the total amount owed by individuals in the UK to £1.457 trillion. Both mortgage debts and other forms of borrowing such as bank loans decreased, with the level of outstanding debt on mortgages down by £400 million on June.

 

The news will not please policy makers, who have attempted to encourage lending with a series of interest rate cuts in the past two years, as well as a sizeable quantitative easing programme. Even taking into account a small rise in credit card borrowing of £92 million, consumer credit fell by a net £200 million.

 

Policy makers will be hoping that the increase in the number of mortgage approvals to 50,123 will be followed by an increase in lending levels in the UK. July's increase was the sixth consecutive monthly increase and took approvals to twice the level that they were in November 2008. Should this trend continue, not only will borrowing pick up but house prices would be likely to recover as well.