Consumers cut back on credit card borrowing
BANK lending fell again in the three months to April, Bank of England figures showed yesterday, while consumers also cut back on new unsecured credit.
Overall lending to non-financial corporations dropped by an annualised 4.9 per cent in the three-month period, with construction lending falling 10.1 per cent and services down by the same and real estate lending down 4.8 per cent.
The manufacturing sector was an exception, with loans up 0.2 per cent.
Credit card lending to consumers slowed to a crawl, rising by an annualised 0.1 per cent in the three-month period, and falling 0.2 per cent in April alone.
“The falling back in net unsecured consumer credit in April after a limited spike in March indicates that consumer appetite for new taking on new borrowing remains limited while there is also an ongoing strong desire of many consumers to reduce their debt,” said economist Howard Archer from IHS Global Insight.
“It is very possible that increased worries over the outlook resulting from news that the economy is back in recession and from the situation in the Eurozone is intensifying the desire to improve personal finances.”
However, there were continued signs of gradual improvement in the housing market, as £12.5bn of mortgage lending was approved in April, up from £12bn in March.