Borrowers paying off their debts
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Your support makes all the difference.Consumers paid more off their credit cards and personal loans than they borrowed last month, figures showed today, in a further sign that households are reining in spending and driving down debts.
The British Bankers' Association (BBA) reported a net repayment of £100 million in unsecured consumer credit lending in August, compared to £100 million borrowing in July.
The surplus, which comes as surveys reveal falling consumer confidence amid warnings over the health of the economy, was driven by a net repayment of loans and overdrafts, while credit card spending was flat.
Elsewhere, the BBA showed a net repayment of £700 million on mortgage lending in the month, compared to a net repayment of £900 million in July, while the number of mortgage approvals increased to 78,288 from 75,314.
Net credit card lending was flat on the month, compared to £300 million in July, while £100 million was paid off loans and overdrafts, compared to £200 million being borrowed.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The renewed net repayment in unsecured consumer credit in August indicates that consumer appetite for taking on new borrowing is very low while there is also a strong desire of many consumers to reduce their debt.
"Consumer desire to get a tighter grip on their finances is the consequence of current very low and falling consumer confidence, which reflects heightened concern over the outlook for the economy and jobs."
The average value of a house sold in the period was 1% higher than a year earlier at £145,500, the BBA said.
Improved mortgage activity in August may have been stimulated by growth in the buy-to-let market, the BBA added.
Total net lending to non-financial businesses fell by £1.3 billion in the month, compared to flat activity in July, while lending to financial businesses increased by £6.5 billion, compared to a £14.1 billion drop.
Mr Archer added: "The drop in net lending to non-financial companies in August reported by the BBA is evidently influenced significantly by low demand for credit and by many companies looking to pay down debt."
The amount of new lending to Britain's small businesses fell 10% in the first six months of this year, BBA figures published yesterday revealed.
New loans for firms with a turnover of £1 million or less totalled £3 billion in the period - equivalent to a monthly average of £506 million. This compares with £3.4 billion lent in the same period a year ago.
The data will fuel pressure on the banking industry, which has pledged to increase the availability of credit to small and medium-sized businesses in its Project Merlin agreement with the Government.
PA
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