Families reign in their borrowing

Families with mortgages are taking measures to limit their debt, according to one industry expert.

Alliance and Leicester said that this demographic group is reducing the amount they spend on credit cards and cutting back on savings in order to take control of their debts.

The company puts this to consistent rises in the interest rate which now stands at 5.75 per cent and does not look like increasing further.

Sean Murphy, director of strategic planning at Alliance & Leicester, said: “Even though average interest rates on unsecured borrowings have actually fallen over the last 12 months, that has not been enough to tempt mortgage borrowers to take on more unsecured debt.

“Their family budgets have been under pressure and they have cut their cloth accordingly.”

Alliance and Leicester’s Borrowing Monitor showed that it is mortgage borrowers in particular that made cuts to borrowing with their rates falling while other groups’ borrowing rates saw “modest growth”.

Mr Murphy concluded that the base rate likely to see downward movements in the future, “some welcome comfort” would come to families with mortgages.

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