Loans on the up as credit card lending falls
Oct 01, 2006
Consumers once again moved away from spending on credit cards in August, while the amount taken out in loans and overdrafts rose.
Public appetite for consumer credit was weak, with underlying net lending on credit cards falling by £0.4 billion in August, following a fall of £0.1 billion in July, figures from the Major British Banking Groups revealed.
Loans and overdrafts were on the up, with net lending rising by £0.2 billion, after July's rise of £0.4 billion. Around 184,560 mortgages were approved in August, which was five per cent lower than in August 2005, although the average loan approved for house purchase was £141,500, which was eight per cent higher than a year ago.
A director of statistics for the British Bankers' Association reported that record gross and net mortgage lending figures are an indication of house price levels and mix of loans, rather than increased volumes. Compared to the volume of secured loans approved at the same time in earlier years, August shows strong and stable demand orientated towards house buying rather than for other purposes, though lower than volumes seen in 2003. A report by Moneyfacts found that 19 credit card providers had increased their interest rates for new customers, some by as much as 12.1 per cent.
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