Loan demand down as people clear debt

Wednesday, 23 December 2009 12:00

Paying off debts and filling up savings pots are continuing to be the priority for banking customers as the year draws to a close.

According to the British Bankers' Association, the amount of customers applying for loans has fallen by 2.2 per cent in the last year.

Meanwhile, the number of people saving their cash has increased by 3.2 per cent in that time and mortgage lending has also gone up by 4.7 per cent.

David Dooks, BBA statistics director, said its data for November showed where households' priorities lay.

"Demand for new personal loans was weak and people are paying off debt or building savings in response to economic circumstances," he said.

The BBA's data showed balances on loans had fallen by £3.6 billion over the year as people paid off their debts. But personal deposits increased by £18 billion in that time.

While gross mortgage lending was 12 per cent lower than at this time last year, there was a rise compared to last month.

Figures showed remortgaging was down 9.6 per cent annually, but house purchases were up 21.8 per cent.

The BBA said this rise in approved mortgages was a reflection on how weak the market was this time last year.

Mr Dooks added: "In the housing sector, prices have continued to edge up and approvals for house purchase are now back at a similar level to that of two years ago.

"Remortgaging continues to run at a low level as borrowers revert to low standard variable rates or trackers from maturing fixed loans."

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