Consumers continue long-running trend of 'paying back debt' on credit cards
Thursday 27 December 2012
Cautious households are paying back “virtually as much as they borrow”, despite a pick-up in people spending money on their credit cards and taking out mortgages, a high street banking report said today.
New spending on credit cards climbed to £7.3 billion in November from its six-month average of £7.1 billion, the British Bankers' Association (BBA) said.
However, consumers continued a long-running trend of paying back more than they put on their plastic, with £7.5 billion made in repayments during the month.
The BBA said that outstanding levels of non-mortgage borrowing contracted by 2.3% over the year to November, driven by a significant shrinking back of personal loans and overdrafts.
Meanwhile, 33,634 mortgage approvals for home buyers worth £5.3 billion were recorded in November, marking the highest number seen since January.
This continues a trend of steady increases seen in recent months, which analysts have put down to a multibillion pound Government scheme aimed at boosting lending to households and businesses, which was launched in August.
However, the BBA said that net mortgage lending has gradually reduced to a "flat balance" amid high repayments being made by home owners on their mortgages as they take advantage of low interest rates to cut down their debt.
Gross mortgage lending totalled £7.7 billion in November, but almost the same amount, £7.5 billion, was made in repayments.
The Council of Mortgage Lenders (CML) said earlier this month that one third of mortgages taken out since 2005 have been overpaid.
The BBA said that inflows into cash Isas have remained strong this year as people have sought accounts paying better rates of interest, leading to a 6.3% rise in all personal deposits over the year to November.
BBA statistics director David Dooks said: "Households are... continuing to repay virtually as much as they borrow and, as people hold on to cash, deposits are growing by 6% annually.
"The situation is not dissimilar in the business world - businesses are holding back investment or expansion plans and building up cash reserves."
Families' budgets are expected to come under further pressure next year from increased costs including soaring energy bills, following a string of price hike announcements.
Research from financial information company Markit has found that three-quarters of households believe their finances will worsen or at best stagnate in 2013.
The BBA also said that net lending to non-financial businesses recorded a £3.1 billion decrease in November.
Its report said firms are continuing to reduce their debt as they wait for more certain trading conditions and a rise in customer and market confidence.
- 1 Emma Watson on Jennifer Lawrence naked photo leak: 'Even worse than seeing women's privacy violated is reading the comments'
- 2 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Cee Lo Green: It is only rape if the victim is conscious
- 5 Nigerian witch-finder Helen Ukpabio threatens legal action against human rights organisations
Emma Watson on Jennifer Lawrence naked photo leak: 'Even worse than seeing women's privacy violated is reading the comments'
Victoria Justice on naked photo leak: 'Let me nip this in the bud right now – pun intended'
Ariana Grande nude photos leak: Pictures are completely fake, say representatives
Saudis risk new Muslim division with proposal to move Mohamed’s tomb
Kate Upton nude photos leak: Model's spokespeople 'looking into' authenticity of indecent images
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...
£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...
£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...
£40000 - £45000 per annum + Benefits + Bonus: Harrington Starr: Front-Office D...