SUMMARY: According to industry research, borrowing in the UK has decreased and we have now turned to saving more and borrowing less.

Debt reaches 'turning point'

By Melinda Varley

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and borrowing has reached "a turning point", and saving is back in fashion according to Hargreaves Lansdown and IFA Promotion (IFAP).

IFAP has said that people are now saving ten times the amount they were borrowing through unsecured loans and credit cards. The investment broker assures reaching such a point was almost inevitable.

The growing realisation that current low interest rates cannot last forever is inspiring ( life insurance quotes ) people to begin paying off their loans.

"I think people are probably beginning to realise we can't have a rosy economic outlook always," said a senior analyst for Hargreaves Lansdown.

"There is a drop in new borrowing as people pay off debt," they said.

The report showed a substantial decrease in personal debt proportional to savings. Consumers ( home insurance quotes ) are now borrowing 10p for every £1 saved, compared with previous figures of 52p of debt per £1 in savings.

But LloydsTSB Financial Markets explains consumers are simply easing off with their borrowing habits amid fears that interest rates may rise in the near future.

Trevor Williams, the chief economist for LloydsTSB Financial Markets, says that ( travel insurance ) although the amount of borrowing is still rising, growth is beginning to slow down.

"People have been reducing their borrowings. If you look at the growth of borrowing through mortgages and of the consumer credit in the UK, it's been falling," he said.

"It does look like people are becoming more cautious and reducing the amount they are borrowing, particularly on credit cards. Credit card borrowing has fallen quite sharply. It does look like people have been expecting high interest rates."

A recent poll taken by LloydsTSB confirms this fear suggesting that more ( secured loans ) and more consumers expected interest rates to rise during the next 12 months.

Personal debt levels of more than £1 trillion mean that almost 15 million people are exposed to external shocks such as a sharp rise in the oil price.

The report's authors have called for new laws to protect borrowers as ( life insurance quotations ) credit is far too easily available in the UK. They also want more responsible lending, clearer information on charges and an end to aggressive marketing.

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