Consumers’ borrowing drops and fewer seek remortgaging
CONSUMERS are borrowing less and repaying more on debts, data from the British Banking Association (BBA) revealed yesterday.
Unsecured credit contracted by 1.2 per cent in the year to May, while net credit card borrowing measured a modest £73m in the month – the weakest rate of borrowing on plastic for this year.
“Demand for unsecured borrowing remains weak with repayments continuing to outweigh new lending,” commented BBA statistician David Dooks.
“Money is still tight and people continue to pay off debt rather than save or borrow.”
In the first five months of the year, personal deposits rose by just £4.8bn, compared with a rise of £13.9bn in the same period of 2010, the BBA said.
Low interest rates have also prompted a decline in the level of re-mortgaging, with any normalisation in Bank rate looking increasingly unlikely for the rest of the year.
The number of approvals for re-mortgage rose by just 532 between April and May. The level of re-mortgages in May was 12.4 per cent below the six month average, according to the data.