Britons are increasing their debts by £1 million every four minutes, Bank of England figures have shown.

During April the amount owed through mortgages, credit cards, overdrafts and loans rose by £11.13 billion to hit £984.81 billion, putting consumers on track to owe £1 trillion by the middle of this month.

mortgage lending rose by a record £9.8 billion during April, increasing the likelihood the Bank of England's Monetary Policy Committee (MPC) will raise interest rates again when it meets next week.

Total mortgage lending also remained strong at £25.39 billion, although the value of loans approved weakened slightly to £26.11 billion and the number of loans approved for house purchase fell to 124,000 - both below the recent three-month average.

Consumer borrowing through loans, credit cards and overdrafts also hit a new high during April to reach £18.07 billion.

After repayments were taken into account, outstanding unsecured debt rose by £1.33 billion, the weakest monthly increase since December.

John Butler, an economist at HSBC, said: "Consumers' overall appetite for credit continues to rise at a rapid pace."

Although the data is only for April and does not capture the May rate hike, it shows little evidence as yet that households have significantly adjusted their behaviour despite the rise in interest rates.

"Overall, to the extent the MPC is worried about the rapid rise in borrowing and associated future vulnerability it presents, this supports further rate rises."

Although rises could slow consumer borrowing, business leaders in Sussex appealed to the Bank of England not to be hasty. Steven Gauge, director of membership and communication at Sussex Enterprise, said: "Another rise in interest rates is potentially damaging news for UK business.

"The MPC cannot take sustained economic growth for granted, particularly in the still vulnerable manufacturing sector.

"The business community has deep concern about this issue and we strongly urge the MPC to be more patient at this critical time.

"A rise in interest rates could push up the value of the pound, placing Sussex exporters under unnecessary financial pressure."

Thursday June 03, 2004