Borrowers pay back £400m in December
Tuesday 31 January 2012
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.
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Bargain Hunter: From The Outsider to 1984, catch a cut-price classic, read it in the rye
Money Insider: Smart alternatives to the pensioner bond
Bank-beating exchange rates on your international payments
- 1 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 5 This crazy skiing video will leave you feeling queasy
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Greece elections: Syriza and EU on collision course after election win for left-wing party
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village