Record borrowing in the UK last month has prompted fears of a meltdown as consumers build up a debt mountain which they may find difficult to afford if interest rates rise or if the sluggish economy causes them to lose their jobs.

Renewed demand from house buyers pushed borrowing to nearly £10 billion last month, the biggest jump ever and a record 14 percent rise on a year earlier.

Bank of England figures:

• Total lending to individuals grew by £10.0 billion or 1.1% in June, seasonally adjusted, £1.0 billion higher than the rise in May.
• The three-month (annualised) growth rate rose to 13.7% from 13.4% (13.2%) in May. The twelve-month growth rate rose to 14.0% from 13.7% in May.
• Secured lending outstanding grew by £7.8 billion or 1.1% in June, seasonally adjusted, £0.7 billion higher than the rise in May.

The growth in the latest month may have been boosted by the impact on the seasonal adjustment factor of the weak out-turn in June 2002 associated with the Jubilee Bank Holiday. The three-month (annualised) growth rate rose to 13.5% from 13.3% (13.1%) in May. The twelve-month growth rate rose to 13.8% from 13.6% in May.

Gross advances were £1.4 billion higher at £21.9 billion. The value of all loans approved was £24.6 billion, £2.9 billion higher than the average in the three months to May.

Loans for house purchase

The number of loans approved for house purchase in June was 17,000 higher than May at 108,000, seasonally adjusted, and compared with the average of 94,000 in the three months to May. There is some evidence to suggest that approvals are influenced by the number of working days in the month.

After allowance for this possible effect, the number of approvals in June (seasonally adjusted) is estimated to be 101,000 compared with 96,000 in May, and an average of 96,000 in the three months to May.

Consumer credit

Consumer credit grew by £2.2 billion or 1.3% in June, seasonally adjusted, £0.3 billion higher than the rise in May. The three-month (annualised) growth rate rose to 14.3% from 13.9% (13.3%) in May. The twelve-month growth rose to 14.6% from 14.1% in May (14.0%). Gross advances were £17.4 billion, compared with the average of £16.8 billion in the three months to May.