Cautious households pay off credit

Britons paid off £100m more than they borrowed on credit cards, loans and overdrafts last month, new figures reveal, suggesting that the desire to borrow is still constrained by the economic outlook.

The British Bankers' Association said the same mood was evident in the mortgage market where net lending totalled only £700m in August, below its average for the first half of the year, though the number of mortgages approved by banks last month was the highest for 15 months.

"The weak economic environment continues to undermine confidence in both household and business sectors," said David Dooks, the BBA's director of statistics. "The general landscape is one of households [and businesses] not wanting to take on more borrowing."

Robyn Daniell, a property economist at Capital Economics, warned the rise in mortgage lending, also seen in statistics issued by the Council of Mortgage Lenders this week, should not be seen as a real turning point. "The chances this will mark the start of a sustained recovery are negligible," he said.