THE Bank of England last night warned of spiralling levels of credit card borrowing as it revealed household debt was growing at 15 per cent a year.

It said in its twice-yearly Financial Stability Review that debt was likely to remain strong over the next few years, but that this could be reversed if there was a substantial fall in the housing market.

It contradicted evidence from major banks of a slowdown in consumer borrowing.

Lloyds TSB said yesterday that it had witnessed a weakening in lending to consumers, echoing similar statements from Royal Bank of Scotland and HSBC last week.

The report from the Bank of England warned that high consumer debt could threaten financial stability and that borrowers may be building up vulnerabilities for the long-term.

However, economist Philip Shaw, at Investec Securities, said the bank was naturally more cautious than the major banks.

He said: ''I am relatively relaxed that the economy is not too vulnerable with debt at these levels. What is important is that households can afford to pay the debt back."

The bank said rising house prices over the past few years had boosted homeowners' capacity to repay their debts.

But any sustained fall in prices would reduce this cushion of housing equity.

"This might reduce their opportunity to remortgage to consolidate other debts or to lower their monthly payments," it said.

Any fall in house prices may also increase the pressure on buy-to-let borrowing if it led to a fall in rent payments.

The report said the immediate prospects for both the UK and international financial systems appeared encouraging.

However, this favourable environment may persuade lenders, borrowers and investors to take on too much debt.