The latest consumer credit figures should give mortgage brokers plenty to think about, as according to the Bank of England, UK consumers net borrowing through credit cards was £1.2bn in August, up from £0.9bn in July. Net borrowing through other forms of consumer credit (such as car dealership finance and personal loans) increased to £1.3bn in August, from £1.2bn in July.
Perhaps more telling is the rate at which this borrowing is growing with the annual growth rate for all consumer credit increasing slightly to 9.6% in August, from 9.3% in July. Over the same period, the annual growth rate for credit card borrowing increased to 13.3% from 12.6% in July.
The cost of carrying that debt also remains high and the Bank of England reported that the effective interest rate paid on interest-charging credit card balances stood at 21.55% in August.
UK Finance data tells a similar story. Outstanding balances on credit card accounts have grown by 9.3% over the 12 months to June and 47.6% of outstanding balances incurred interest compared to 47.8% in June 202. UK cardholders made 439 million credit card transactions in June, 8% more than in June 2025. The total spend of £24.4bn was 9.2% higher than June 2025.
Of course, greater credit card use does not automatically mean households are in financial difficulty, as many people use cards for day-to-day spending and repay the balance each month.
This could become an even greater consideration if interest rates rise. Higher rates can feed through into the cost of unsecured borrowing, with credit card APRs and rates on new personal loans potentially increasing. For borrowers already carrying several balances, that can add further pressure to monthly outgoings and increase the overall cost of servicing their debt.
But for those carrying balances from one month to the next, particularly across several cards or alongside personal loans and other unsecured commitments, the cost can soon become significant. If the APRs attached to those debts increase, some borrowers may find that consolidating them into a single facility makes financial sense.
For some homeowners, a second charge mortgage can offer one option. It may allow a number of unsecured debts to be brought into one monthly payment, often at an interest rate below that charged on credit cards or other forms of unsecured borrowing.
That does not mean a second charge will be right in every case. Brokers still need to consider the total amount repayable, the term of the new loan and the fact that previously unsecured debt will become secured against the client’s home.
One of the main benefits of a second charge is that the borrower can retain their existing first charge mortgage. This may be particularly useful for clients who remain on a competitive mortgage rate or who would face an early repayment charge if they remortgaged.
There are also cases where a remortgage may not be possible because of changes to income, credit history or lender criteria. A second charge lender may take a different view of the case, particularly where the borrower has enough equity in their property and can show that the new commitment is affordable.
However, brokers need to look beyond the immediate monthly saving, as moving debt from credit cards or personal loans onto a second charge means turning unsecured borrowing into debt secured against the client’s home. Extending the repayment period can also mean the borrower pays more interest in total, even where the monthly payment and interest rate are lower.
These points need to form part of any discussion about whether consolidation makes sense and preparation is equally important.
Where a client has built up a number of credit commitments, the broker and lender need to understand how the debt arose and whether consolidation is likely to put the household finances on a more stable footing.
There is a clear difference between a borrower whose balances increased because of a one-off period of higher expenditure and someone who is regularly relying on credit to meet normal household costs. That background matters when assessing whether a second charge represents a sustainable answer.
Brokers should therefore build a view of the client’s current commitments, outstanding balances, monthly payments, income and expenditure before submitting an application. Any missed payments or other credit issues should also be explained from the outset where possible.
The aim should not simply be to clear existing balances. It should be to ensure the client can afford the new commitment and is in a stronger financial position afterwards.
This is also why it is important to consider the main borrowing options side by side. A further advance, remortgage or second charge may all be possible depending on the client’s circumstances. The right answer will depend on the cost of each route, the client’s existing mortgage terms, any charges involved and the total amount repayable.
With credit card borrowing growing, conversations around unsecured debt are likely to become increasingly common.
Eddie Lau, broker account manager at Norton Broker Services
