Almost a decade of improvements in household finances has started to be unpicked in the year since the EU referendum, according to the Bank of England.

Findings from a biannual study for Threadneedle Street of more than 6,000 UK households found an increase in people reporting high mortgage debt when considering their income, while there were also worrying increases in repayments and in costs for renters.

The survey, carried out by the research firm NMG Consulting on behalf of the Bank in September, found the highest percentage of households reporting mortgage debts of more than four times their earnings than at any time since 2013. It also said the proportion with debt repayments representing more than 40% of income had risen over the past year – although remaining below historic levels.

The increase was described by the report as a “slight deterioration” in the health of households’ finances, although it added that the trend for stronger balance sheets since the credit crunch in 2008 was coming to an end. This could fuel growing concerns over the strength of household finances over the coming years.



The survey also found that for the first time in the past three years, the balance of households expecting an improvement in their financial position had turned negative. “The responses to a question on expectations about the general economic situation have declined sharply since the EU referendum result,” the report added.

The findings are important for the Bank because they will help to shed light on the health of household finances just before its monetary policy committee increased the cost of borrowing for the first time in a decade.

The survey said last month’s interest rate hike – from 0.25% to 0.5% – would have a “limited impact” on households with high debt repayments compared to their income. Only around 2.5% of homes with a mortgage would need to take action by spending less or working more, it said.

The figures also come amid a boom in the usage of personal loans, credit cards and car finance, with a growth rate outstripping the rise in earnings by almost five times. Bank of England data shows personal debts have risen to levels unseen since the financial crisis, reaching more than £200bn.

The report found that average borrowing on consumer credit was about £8,000 – broadly flat versus aggregate trends. However, it cautioned that the latest survey data did not appear to pick up the continuing trend in the official data – which shows an annual growth rate of almost 10%.

There was some positive feedback from the report, showing consumer expectations for rising wages are beginning to return to their pre-referendum levels. The Bank has been watching for rising pay levels to justify its rate hike, believing that higher wages tend to spark a spiral of increasing prices.

The Office for National Statistics also reported a slight pick-up in earnings growth earlier this week, but the 2.3% annual increase in the three months to October was lower than the 2.6% recorded in the same period of 2016 – while pay still trails well behind inflation for an eighth month.

• Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.