Borrowers pay back £400m in December

 

Consumers cut their debts at the fastest rate in two decades during December amid signs they dipped into savings to pay for Christmas.

Bank of England figures showed a net repayment of £377 million in unsecured loans, the largest since records began in 1993 as analysts said consumers continued to lack the appetite to borrow amid concerns about the wider economy and jobs.

The figure reversed the £400 million increase in consumer credit reported for November, which had been in line with the six-month average.

Credit card borrowing was flat for the third month in a row, despite the festive season.

Meanwhile, the Buildings Societies Association (BSA) said that consumers took out £100 million of savings in December, indicating they could have been using spare cash to help tide them over Christmas rather than taking on more debt.

BSA director-general Adrian Coles said: "It is clear that savers are still struggling to save as much as they would like, or are choosing to use spare cash to pay down debt instead.

"The fall in the rate of inflation may offer some breathing space to households but, if conditions in the labour market continue to deteriorate and wage growth remains low, household finances are likely to remain squeezed for some time to come."

The Bank of England figures showed that mortgage approvals rose to a two-year high in December, but analysts said the housing market remains weak compared with long-term norms, and is likely to come under further pressure from low confidence.

The number of loan approvals for house purchase rose to 52,939 in December, the highest figure since December 2009 and an increase of just over 300 on the November.

But the upturn is slower than forecasters had been predicting, dampening hopes of any strong recovery in the near future.

Samuel Tombs, an economist at Capital Economics, described the latest figures as "disappointing" and said they showed the recent recovery in mortgage approvals had "ground to a near halt".

He said: "The monthly rise of 300 in the official measure of mortgage approvals for new house purchase to 52,900 was well below the consensus expectation of a rise of more than 1,000."

The value of the mortgage approvals stood at £7.5 billion, unchanged from last month's figure.

Howard Archer, chief UK economist at IHS Global Insight, said he expected consumer borrowing to remain limited over the coming months, although he said more people could turn to loans as their budgets come under further pressure from job losses.

He said: "The record net repayment in consumer credit in December highlights not only very low consumer appetite for new taking on new borrowing but also the strong desire of many consumers to reduce their debt."

Overall, the BSA said savings balances held by mutuals grew by £4 billion last year, compared with a £200 million increase in 2010.

The BSA's figures also showed a 16% increase in gross mortgage lending in 2011 compared with 2010, to reach £23.6 billion, although house transactions generally remain low by historic standards.

PA

News
people'It can last and it's terrifying'
News
people Emma Watson addresses celebrity nude photo leak
Arts and Entertainment
tv
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
PROMOTED VIDEO
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
football
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
News
i100
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Life and Style
tech
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Derivatives Risk Commodities Business Analyst /Market Risk

    £600 - £800 per day: Harrington Starr: Derivatives Risk Commodities Business A...

    Power & Gas Business Analyst / Subject Matter Expert - Contract

    £600 - £800 per day: Harrington Starr: Power & Gas Business Analyst/Subject Ma...

    Infrastructure Lead, (Trading, VCE, Converged, Hyper V)

    £600 - £900 per day: Harrington Starr: Infrastructure Lead, (Trading infrastru...

    Planning Manager (Training, Learning and Development) - London

    £35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

    Day In a Page

    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York
    Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

    'I like Orwell's writing as much as the next talented mediocrity'

    Will Self takes aim at Orwell's rules for writing plain English
    Meet Afghanistan's middle-class paint-ballers

    Meet Afghanistan's middle-class paint-ballers

    Toy guns proving a popular diversion in a country flooded with the real thing
    Al Pacino wows Venice

    Al Pacino wows Venice

    Ham among the brilliance as actor premieres two films at festival
    Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

    Neil Lawson Baker interview

    ‘I’ve gained so much from art. It’s only right to give something back’.
    The other Mugabe who is lining up for the Zimbabwean presidency

    The other Mugabe who is lining up for the Zimbabwean presidency

    Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
    The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

    The model for a gadget launch

    Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
    Alice Roberts: She's done pretty well, for a boffin without a beard

    She's done pretty well, for a boffin without a beard

    Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
    Get well soon, Joan Rivers - an inspiration, whether she likes it or not

    Get well soon, Joan Rivers

    She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering