Bank of England's lending report for April shows spike in credit card borrowing
The Bank of England has released its latest report on lending to individuals covering April. Mortgage lending was lower than expected but there was an increase in credit card borrowing which helped push up lending figures more than expected.
Mortgage approvals for house buying fell to 45,166, the lowest level recorded for the month of April since records began in 1992, down from 47,145 in March, below most predictions and the lowest level since December 2010. Along with data released today from the Land that showed a slowdown in the housing market, the mortgage approvals number is likely to support the argument that house prices are likely to fall during the rest of 2011.
Brian Murphy, head of lending at independent mortgage brokers, Mortgage Advice Bureau said: "The ongoing drop in the number of remortgages reflects how people increasingly believe that an interest rate rise is unlikely in the short-term and that, if one does come, rates overall will remain very low for the foreseeable future."
However, high credit card spending , the biggest rise in 14 months, is in part due to the number of bank holidays in April and the Royal Wedding that helped retail sales. Unsecured consumer lending rose to £504 million, mostly as a result of higher credit card spending. Most experts had expected the figure to be around £250 million.
However, the increase in borrowing comes from a low starting point as the level was very low compared to normal levels.
Howard Archer, Chief UK & European Economist for IHS Global Insight said: “The overall impression continues to be that consumer appetite for taking on new borrowing remains limited while there is also an ongoing desire of many consumers to reduce their debt.”
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