The recent rapid rise in consumer borrowing is still a potential threat to the stability of the UK's financial system, says the Bank of England.

The Bank is concerned about the damage that could be done to the finances of lenders if borrowers default on their borrowing during an economic downturn. The Bank's continued worries are made clear in the latest minutes of its Financial Policy Committee (FPC). These highlight the growth of credit card, bank loan and car loan borrowing. "[Consumer credit] had reached an annual growth rate of 10.9% in November 2016 - the fastest rate of expansion since 2005 - before easing back somewhat in subsequent months," the Bank said. "Dealership car finance had seen the fastest expansion in recent years, but credit cards and personal loans had contributed materially to the acceleration in consumer credit in 2016," it added.

Uncertainty

These elements of household borrowing - known as consumer credit - are dwarfed by the amount of money that has been lent to home buyers in the form of mortgages. But the Bank fears that lenders may have become too slack in deciding to whom they should lend....Read more here