CONCERN that Britain could be returning to its bad habits of soaring debts grew yesterday after official figures showed the biggest rise in credit card borrowing for a year.

Borrowing on credit cards rose by £733 million in January, the Bank of England reported. Overall net lending to consumers, the bulk of which is secured on people’s homes, rose by £10.5 billion, the fastest rise since July 2004.

The figures were revealed as HBOS, the banking group, reported that impairment losses from bad debts in its retail division had soared by 48 per cent to almost £1 billion last year.

Meanwhile the proportion of mainstream mortages in arrears rose to 1.3 per cent, according to HBOS, and the proportion of specialist mortages in arrears increased to 2.32 per cent, pushing the total value of debt in arrears up to £4.2 billion from £2.6 billion the previous year.

Mark Thomas, analyst at Keefe, Bruyette & Woods, said the rise in bad debt was “perfectly manageable” in the context of revenue growth and cost control, adding that it was an “irritant” rather than a major concern.

The rise in credit card borrowing marked a shift from a pattern of falls in unsecured lending seen in the past year and a half.

Vicky Redwood, of Capital Economics, said that consumer confidence remained subdued, although if the housing market continued to gather momentum it could encourage more unsecured debts.

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