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Cautious approach to credit cards from consumers | Cautious approach to credit cards from consumers |
(40 minutes later) | |
Credit card lending in April recorded its biggest monthly contraction since August 2006, Bank of England figures show. | Credit card lending in April recorded its biggest monthly contraction since August 2006, Bank of England figures show. |
Repayments outstripped new borrowing by £118m, although lending through loans and overdrafts grew. | Repayments outstripped new borrowing by £118m, although lending through loans and overdrafts grew. |
The figures offer further evidence of families taking a cautious approach to debt in the current economic climate. | The figures offer further evidence of families taking a cautious approach to debt in the current economic climate. |
Total lending to individuals rose by £1.4bn, in line with the average of the previous six months, the Bank said. | Total lending to individuals rose by £1.4bn, in line with the average of the previous six months, the Bank said. |
Savings effect | Savings effect |
Credit card borrowing has contracted in four of the last six months. However, there is some volatility in the figures, as borrowing on plastic rose by £200m in March. | Credit card borrowing has contracted in four of the last six months. However, there is some volatility in the figures, as borrowing on plastic rose by £200m in March. |
"A cautious approach to credit card debt in the current climate is no bad thing," said William Hunter, of Hunter Wealth Management. | |
"Many households have a fair amount of debt already and so a move away from credit card debt is far more sensible than 'maxing out'. | |
"The irony is that an economy where consumers are cautious is going to struggle to grow. Debt pay-down is a double-edged sword and the Bank of England knows that." | |
There is some evidence of consumers dipping into their savings instead of borrowing. | There is some evidence of consumers dipping into their savings instead of borrowing. |
Separate figures from the Building Societies Association showed that withdrawals from accounts in mutual societies outstripped new saving for the fifth month in a row in April. | Separate figures from the Building Societies Association showed that withdrawals from accounts in mutual societies outstripped new saving for the fifth month in a row in April. |
However, this contraction of £463m was about half of the level seen in the previous month. | However, this contraction of £463m was about half of the level seen in the previous month. |
'Credit is tight' | 'Credit is tight' |
Mortgage lending remained relatively static compared with recent months, the Bank of England's figures showed. | Mortgage lending remained relatively static compared with recent months, the Bank of England's figures showed. |
The number of home loans approved for house purchases rose slightly from 51,067 in March to 51,823 in April. However, the latest figure was down on the previous six-month average. | The number of home loans approved for house purchases rose slightly from 51,067 in March to 51,823 in April. However, the latest figure was down on the previous six-month average. |
"Relatively tight credit conditions may well make it hard for many people to get a mortgage," said Howard Archer, of IHS Global Insight. | "Relatively tight credit conditions may well make it hard for many people to get a mortgage," said Howard Archer, of IHS Global Insight. |
"On top of this, some mortgage rates have risen recently due to lenders' higher borrowing costs in wholesale markets and this could well weigh down on housing market activity." | "On top of this, some mortgage rates have risen recently due to lenders' higher borrowing costs in wholesale markets and this could well weigh down on housing market activity." |
Approvals for remortgaging were also up slightly from March, to 31,214 in April. | Approvals for remortgaging were also up slightly from March, to 31,214 in April. |
These figures remain well below the level seen during the housing boom. In late 2006, nearly 130,000 mortgages were approved for house purchases per month. | These figures remain well below the level seen during the housing boom. In late 2006, nearly 130,000 mortgages were approved for house purchases per month. |
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