UNSECURED consumer credit fell in December, Bank of England figures showed yesterday, as consumers paid down credit card bills.
Lending to firms fell in the three months to November, with small businesses borrowing less than they were a year ago.
However, mortgage lending rose to a two-year high, as house-buyers took advantage of low interest rates.
Outstanding consumer credit fell £400m in December, or 0.2 per cent, while credit card borrowing remained unchanged for the second consecutive month.
“It is notable that even at Christmas, consumers were keen to keep down their borrowing,” said Howard Archer, economist at IHS Global Insight.
“The record net repayment in consumer credit in December highlights not only very low consumer appetite for new borrowing but also the strong desire of many consumers to reduce their debt. This desire to get a tight grip on their finances is clearly the consequence of current heightened concerns over the outlook for the economy and jobs.”
Mortgage lending expanded slightly with £7.5bn borrowed to buy houses, up £200bn on November’s level – a two-year high, though lending remains below pre-2008 trends.
Meanwhile lending to non-financial businesses fell 2.1 per cent compared with November 2010, while lending to small- and medium-sized enterprises fell 6.1 per cent – the sector’s 26th consecutive annual fall.
