Loan repayments 'outstrip new borrowing'

 

Consumers have paid back personal loans, credit cards and overdrafts at the fastest rate for more than a year as their appetite for borrowing remains weak, a high street banking report said today.

Repayments have outstripped new borrowing, resulting in a net repayment of £305 million in consumer credit lending in February, the highest net repayment since January last year, the British Bankers' Association (BBA) said.

New spending on credit cards totalled £7 billion, but cautious consumers paid off more than they spent, repaying £7.3 billion, continuing a long-standing trend.

The number of mortgage approvals for house purchase fell back from January's two-year high of just under 38,000 to 33,103 as interest from first-time buyers dropped off.

Estate agents and lenders have previously been reporting a surge in interest from first-time buyers looking to take advantage of a stamp duty concession, which ends tomorrow.

The report said house purchase approvals had dropped off to more "normal" levels as demand from first-time buyers seeking to beat the stamp duty deadline fell back.

Fears have been raised that the surge in first-time buyer interest will be followed by a dip, disrupting the fragile housing market.

But lenders hope that the Government's recently-launched NewBuy scheme, to help those buying a new-build home with just a 5% or 10% deposit rather than the typical 20%, will help to offset this.

The NewBuy scheme is open to both first-time buyers and home movers, although this will not help those trying to buy or sell an existing home.

BBA statistics director David Dooks said: "Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing.

"Confidence will be helped in the coming months by official schemes to support the mortgage market and stimulate business demand for credit."

Gross mortgage lending totalled £7.9 billion in February, a 1.9% drop year-on-year and below the six month average.

High repayments by householders meant that mortgage lending only increased by £545 million in February.

Howard Archer, chief UK and European economist at IHS Global Insight said the net mortgage lending figure was "very low compared to long-term norms".

He said: "This suggests that house owners are looking to take advantage of low mortgage interest rates to reduce their outstanding mortgage levels to improve their balance sheets."

Lenders have been offering some of their cheapest ever deals as the Bank of England maintains the base rate at a 0.5% historic low, but lenders are expected to tighten up on borrowing this year and several have recently announced mortgage hikes.

PA

PROMOTED VIDEO
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

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    As in 1942, Germany must show restraint over Greece

    As in 1942, Germany must show restraint over Greece

    Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
    Britain's widening poverty gap should be causing outrage at the start of the election campaign

    The short stroll that should be our walk of shame

    Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
    Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

    Homeless Veterans appeal

    The rise of the working poor: when having a job cannot prevent poverty
    Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

    Prince Charles the saviour of the nation?

    A new book highlights concerns about how political he will be when he eventually becomes king
    How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

    How books can defeat Isis

    Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
    Judith Hackitt: The myths of elf 'n' safety

    Judith Hackitt: The myths of elf 'n' safety

    She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
    The open loathing between Barack Obama and Benjamin Netanyahu just got worse

    The open loathing between Obama and Netanyahu just got worse

    The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
    French chefs get 'le huff' as nation slips down global cuisine rankings

    French chefs get 'le huff' as nation slips down global cuisine rankings

    Fury at British best restaurants survey sees French magazine produce a rival list
    Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

    Young carers to make dance debut

    What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
    Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

    Design Council's 70th anniversary

    Four of the most intriguing prototypes from Ones to Watch
    Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

    Dame Harriet Walter interview

    The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
    Art should not be a slave to the ideas driving it

    Art should not be a slave to the ideas driving it

    Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
    Bill Granger recipes: Our chef's winter salads will make you feel energised through February

    Bill Granger's winter salads

    Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
    England vs Wales: Cool head George Ford ready to put out dragon fire

    George Ford: Cool head ready to put out dragon fire

    No 10’s calmness under pressure will be key for England in Cardiff
    Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

    Michael Calvin's Last Word

    Time for Old Firm to put aside bigotry and forge new links