Personal loans, credit cards and overdrafts are being repaid at the fastest rate for over 12 months, new figures show.
A high street banking report published today says that consumer appetite for borrowing remains weak. There was more debt repayment than new borrowing in February, resulting in a £305 million net repayment of consumer credit. The British Bankers’ Association reports that this is the highest net repayment since January 2011.
Consumers spent £7 million on credit cards last month but repaid £7.3 billion, which reflects an ongoing trend for debt repayment over borrowing.
The analysis also revealed that the number of mortgage approvals dropped from January’s two-year peak of 38,000 to 33,103. Many lenders are hoping that the Government’s NewBuy scheme will help offset a drop in interest from first-time buyers.
BBA statistics director David Dooks said, "Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing."
He added, "Confidence will be helped in the coming months by official schemes to support the mortgage market and stimulate business demand for credit."