fully repaid ( the ons has recently decided that most of it should therefore be re - allocated to the government, an accounting change planned for later this year. ) taken together, car finance and student loans account for almost all the rise in households ’ unsecured gearing in recent years, as currently measured. the remainder – comprising the more conventional credit card balances, consumer loans and overdrafts – is plotted in blue in chart 5. it hasn ’ t grown much and is pretty much the same as it was, relative to income, in the mid - 1990s. you might, however, expect to see them in first differences ( i. e. in the growth rate of debt ), as these could help cleanse the data of enduring country - specific differences in the sustainable level of debt. all speeches are available online at www. bankofengland. co. uk / speeches chart 5 : growth in unsecured lending accounted for by car finance and student loans car finance student loans other consumer credit per cent per cent per cent of disposable income chart 6 : stock of mortgages still higher than precrisis average, interest cost well below average interest payments to income ( lhs ) debt to income ( rhs ) pre - crisis average ( both series ) - sources : bank of england, ons, fla and bank calculations. the stock of student loans has been projected to 2018 q3. fla data for car finance interpolated and used up to 2012. ‘ other consumer credit ’ is predominantly personal loans, credit cards and overdrafts. sources : ons, thomas and dimsdale ( 2017 ) sheet m12, bank of england, and bank calculations. pre - crisis averages calculated over the period 1993 - 2007 q2. second, even when there aren ’ t structural changes in the nature of debt, other things can affect its affordability over time. the most important is the neutral or equilibrium rate of interest. unlike consumer loans and credit card debt, the stock of mortgages is still significantly higher than it was 25 years ago ( chart 6 ). but the rate of interest required to stabilise the economy was extremely high at that time, much higher than it is today. so despite the higher stock, interest payments on mortgages are well below the pre - crisis average. looking ahead, from these very low levels, the neutral rate of interest is more likely to rise than fall over the future. but

) eu ( lhs ) leveraged loans high - yield bonds 2, 000 1, 500 1, 000 - 10 sources : lcd, an offering of s & p global market intelligence and bank calculations. sources : lcd, an offering of s & p global market intelligence, ice / bofaml, board of governors of the federal reserve system ( us ) and bank calculations. option - adjusted spread on index of high - yield bonds issued in the us and spread to maturity on index of leveraged loans issued in the us measured relative to the spot treasury curve. graham and leary ( 2011 ), harris and raviv ( 1991 ). atkinson ( 1967 ), bernanke et al. ( 1996 ), greenwood and hanson ( 2013 ). the characteristic feature of cov - lite loans is not that they have fewer covenants, but that the requirements bind less often, and in particular only in response to particular events ( such as additional financing ). more traditional, “ cov - heavy ” contracts require firms to meet such requirements continually ( becker and ivashina ( 2016 ) ). all speeches are available online at www. bankofengland. co. uk / speeches if you think there are parallels here with the subprime mortgage boom in the u. s., ahead of the last crisis, then you ’ d be right. those too were grouped together and sold to investors as packages of loans, diluting the ability and incentive to monitor individual risks ; they grew extremely rapidly, particularly in the last year or two of the boom – and, as it happens, they accounted at the peak for a similar share of their underlying market ( 13 % of total u. s mortgage debt ). we should recognise that, in aggregate, corporate leverage in the uk has fallen since the crisis ( chart 17, which includes bonds as well as bank loans ). 12 as with mortgages, interest payments on those debts remain well below average and, if bond markets are anything to go by, will remain so for quite a while yet. chart 18 : uk banks hold only a small fraction of clos chart 17 : corporate gearing still well below peak but has grown recently per cent of earnings other corporate debt commercial real estate debt ea banks us banks japanese banks us insurers pension funds sources : association of british insurers, bank of england, cass commercial real estate lending survey, deloitte, lcd, an offering of s & p global market intelligence, london stock