The Bank of England's £11.4bn warning

Consumer credit has rocketed at more than four times the rate that income has been increasing. Credit: PA

The Bank is worried. Here’s the problem: we’ve been borrowing more than it thinks is healthy. And lenders have been lending more than it thinks is healthy too.

This is because the world of low interest rates, low unemployment and accelerating GDP growth cannot be assumed to persist.

Were circumstances to change - which of course may happen given rising inflation, Brexit risks and falling growth in GDP – lenders, who have assumed that things will just mosey along as has become usual, could be in trouble.

And not just lenders (and these are my words not the Bank’s), consumers would be in trouble too.

For if times get tougher, borrowers could just walk away from their debts, leaving lenders with a gaping hole in their balance sheet.

Borrowers have been securing mortgages many times their income. Credit: PA

So today it’s putting the banks on notice, forcing them to build up their reserves.

Over the next 18 months banks will have to set aside an extra 1% against their loan books. That’s approximately £11.4bn.

So what are they so worried about?

  • Consumer credit

This been going up rapidly. It went up by 10.3% last year – this is, of course, over four times the rate that income has been increasing.

Credit card debt, personal loans and motor finance all grew rapidly.

Why this particularly matters is because we are 10 times more likely to walk away from such loans than mortgage debt!

  • Mortgage lending

This has been increasing. Mortgage debt is now 101% of household income.

The Bank highlighted some borrowers have been obtaining mortgages many times their income.

Should interest rates go up this could prove very problematic.

  • UK commercial property prices and global risks
The Bank has warned about the price of commercial property in the capital. Credit: PA

These look unsustainable, with the Bank singling out London commercial property.

Add to this some global risks ahead – Brexit of course, China – where debt is now at an almost unprecedented high and it’s clear why the Bank is worried.

For now it’s lenders that the Bank is focusing its attention on.

And what about consumers?

Well so far the Bank seems to be saying we can just carry on as normal.

At least in the report it issued today, which is focused on lenders rather than borrowers.

But it’s not hard to read between the lines.

The Bank’s infographic is dotted with rain storms and umbrellas. It believes rainy days are ahead.