Consumers continuing to pay off debts

Consumers repaid a record level of unsecured debt during October as they continued to focus on improving their finances in the face of the recession, figures showed today.

People reduced their outstanding credit card, loan and overdraft debt by £579 million during the month, the biggest contraction in unsecured lending since Bank of England records began in their current format in 1993.



It was also only the sixth time on record that repayments for consumer credit have outstripped new borrowing.



But on the mortgage side, the number of loans approved for house purchase increased for the 11th consecutive month, rising to 57,345, their highest level since March 2008.









The contraction in unsecured credit was driven by strong repayments on loans and overdrafts, with outstanding borrowing through these falling by £713 million during October, the ninth time the figure has been negative during the past 10 months.

But credit card lending rose by £134 million in October, nearly double the £78 million rise seen during the previous month.



Howard Archer, chief UK and European Economist at IHS Global Insight, said: "The record, and fourth, successive net repayment in consumer credit in October is clearly the consequence of many consumers' desire to reduce their debt, low demand for credit and a lack of availability of unsecured credit from banks."



Net mortgage lending, which strips out redemptions and repayments, totalled £922 million in October, up slightly on both the previous month and the six-month average.



But it remained well down on levels of more than £9 billion seen regularly during 2006 and 2007.



The number of people remortgaging remained subdued, with just 24,596 loans approved for homeowners switching to a new deal, down on both the previous month's figure and the recent average.



Mr Archer said: "The Bank of England data indicate that mortgage activity continues to firm gradually from the record low level seen in November 2008, as it is supported by low mortgage interest rates and the significant fall in house prices from their 2007 peak levels to their March/April 2009 troughs."



The Building Societies Association also released figures today showing that mortgage lending among mutuals continued to decline.



Building society mortgage customers repaid £521 million more than the sector advanced during October, the 10th consecutive month during which mortgage lending has contracted.



There was also a further sharp fall in the amount of money people held with the sector during the month, with consumers withdrawing £1.24 billion more than they paid into building society accounts, the eighth month in a row that this has happened.



Adrian Coles, director-general of the BSA, said: "There is little incentive for people to increase savings whilst the Bank rate remains at its current low level, and many may opt to repay debt instead.



"Building societies and other deposit-takers are also facing heightened competition from institutions with a Government guarantee, which is creating further distortions in the savings market."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
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: Financial Adviser

    £20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

    SThree: Graduate Recruitment Resourcer

    £20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

    Guru Careers: Application Support Analyst / 1st Line Support

    £25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

    Guru Careers: .NET Developer / Web Developer

    £45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence