Consumers pay off debts as businesses reduce borrowing
GROWTH in mortgage lending fell to its slowest pace for eleven years in January while the amount borrowed by consumers and businesses also tumbled, according to figures released yesterday.
The British Bankers’ Association (BBA) said net mortgage lending rose 1.3 per cent in the year to January, compared with growth of 2.3 per cent in January 2011 and 10.6 per cent in the pre-crisis year to January 2007.
Unsecured consumer credit fell 1.6 per cent in the year, continuing the long deleveraging that began in June 2009. There was a 5.9 per cent fall in personal loans and overdrafts but credit card debt rose by 4.7 per cent.
“The further, and increased, net repayment in unsecured consumer credit in January 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,” said IHS Global Insight’s Howard Archer.
“Consumers’ desire to get a tight grip on their finances is clearly the consequence of still serious concerns over the outlook for the economy and jobs.”
Lending to businesses fell 4.1 per cent, as firms cut demand for credit.