Consumers tightening belts as lending slows

Figures for April 2007 from the BBA showed that:

• Total sterling lending to the UK private sector rose by an underlying £9.1bn net (+0.7 per cent) to £1,307bn. This compares with an underlying rise of £9.1bn in March and an average of +£11.4bn over the previous six months.
• Net mortgage lending rose by an underlying £5.0bn. This was slightly lower than both the previous month and the recent monthly average of £5.4bn. Unsecured personal borrowing was unchanged overall in April, compared with a fall of £0.1bn in March. Underlying credit card borrowing fell by £0.1bn, while loans and overdrafts rose by £0.1bn.
• There was a strong rise in lending to real estate companies (+£1.3bn) and also increases in lending to wholesale & retail trade (+£0.4bn), hotels & restaurants (+£0.3bn) and transport, storage & communication (+£0.3bn), partially offset by a decline of £0.5bn in lending to food, beverages & tobacco companies.
• Deposits from the private sector rose by £13.3bn (+1.4%) to £982bn. Personal deposits increased by £1.9bn, less than the recent average monthly growth of £2.8bn, despite inflows to ISAs before the financial year end.

David Dooks, BBA director of statistics, said: “Lower mortgage demand, weaker deposit growth and little change in personal loans or credit card borrowing all point to people paying more attention to their finances. High house prices and increasing monthly repayment costs are causing a slow down in the mortgage market and people are using money from their accounts instead of borrowing to meet their spending needs.”