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 Hair loss explained: How and why men go bald
- 2 Game of Thrones season 6: Jon Snow theorists believe the Stark may have a twin sister
- 3 Artist takes LSD, draws herself over different stages of the 9-hour trip to show its effects
- 4 A pint of water every day is the key to losing weight, scientists say
- 5 Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Most expensive city to live in for expatriates: Luanda, Angola takes number one spot with Hong Kong and Zurich in top three
Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
Irish tourist filmed fighting with shopkeepers in Turkey says they 'messed with the wrong man'
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal get peerages
Moody neurotics are more likely to be creative geniuses, study says
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith calls for urgent ESA overhaul as part of drive to cut down welfare costs
£16000 - £20000 per annum: Recruitment Genius: This company is a world leader ...
£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...
£19000 - £23000 per annum: Recruitment Genius: This IT and Telecoms company ar...
£23000 per annum: Recruitment Genius: The Visitor Fundraising Team is responsi...