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| Credit card borrowing shows biggest decline in six years | Credit card borrowing shows biggest decline in six years |
| (7 months later) | |
| Borrowing on credit cards suffered its biggest fall in almost six years in July as consumers kept a tight rein on their spending. | Borrowing on credit cards suffered its biggest fall in almost six years in July as consumers kept a tight rein on their spending. |
| Figures from the Bank of England showed a net fall of £147m in credit card lending during the month – the first drop in three months and the biggest since August 2006. | Figures from the Bank of England showed a net fall of £147m in credit card lending during the month – the first drop in three months and the biggest since August 2006. |
| The figure underscores consumers' reluctance to spend, with retail figures for the same period weaker than expected, despite hopes of a lift during the Olympics. | The figure underscores consumers' reluctance to spend, with retail figures for the same period weaker than expected, despite hopes of a lift during the Olympics. |
| Since the start of 2012, credit card lending has shown a mixed pattern of rises and falls, with June seeing an uplift of £235m in borrowing, but generally it has remained muted when compared with activity before the economic downturn began in earnest. | Since the start of 2012, credit card lending has shown a mixed pattern of rises and falls, with June seeing an uplift of £235m in borrowing, but generally it has remained muted when compared with activity before the economic downturn began in earnest. |
| Back in May 2008 net lending reached £734m, and throughout the rest of that year it regularly topped £300m. | Back in May 2008 net lending reached £734m, and throughout the rest of that year it regularly topped £300m. |
| July's fall in credit card borrowing was accompanied by a drop in loans and other unsecured debts, which meant overall consumer credit decreased by £220m throughout the month, the biggest drop since February 2012 and weaker than the previous six-month average of 0% movement. | July's fall in credit card borrowing was accompanied by a drop in loans and other unsecured debts, which meant overall consumer credit decreased by £220m throughout the month, the biggest drop since February 2012 and weaker than the previous six-month average of 0% movement. |
| The figures for consumer credit no longer wrap in student loans, with the BoE saying it had removed such debts from its figures because they were not subject to the same influences as other borrowing. | The figures for consumer credit no longer wrap in student loans, with the BoE saying it had removed such debts from its figures because they were not subject to the same influences as other borrowing. |
| Announcing the change in July, the BoE said stock of student loans had doubled to £47bn over the five years to 5 April 2012, and now represented more than 20% of the stock of overall consumer credit. | Announcing the change in July, the BoE said stock of student loans had doubled to £47bn over the five years to 5 April 2012, and now represented more than 20% of the stock of overall consumer credit. |
| The BoE's figures also showed a slight recovery in mortgage lending, with the number of approvals increasing after hitting an 18-month low in June. | The BoE's figures also showed a slight recovery in mortgage lending, with the number of approvals increasing after hitting an 18-month low in June. |
| There were 47,312 approvals for house purchase in July worth a total of £7.1bn – an increase on June's 44,000 – but analysts said weak credit growth is likely to continue to act as a "brake on the economy" for some time, despite the recent launch of the Funding for Lending scheme. | There were 47,312 approvals for house purchase in July worth a total of £7.1bn – an increase on June's 44,000 – but analysts said weak credit growth is likely to continue to act as a "brake on the economy" for some time, despite the recent launch of the Funding for Lending scheme. |
| There have been few new deals for first-time buyers since the launch of the scheme, and many would-be homeowners are still finding it hard to meet lenders' criteria for new loans. | There have been few new deals for first-time buyers since the launch of the scheme, and many would-be homeowners are still finding it hard to meet lenders' criteria for new loans. |
| Samuel Tombs, an economist for Capital Economics, said: "Looking ahead, credit might become easier to obtain now the Funding for Lending scheme is up and running. | Samuel Tombs, an economist for Capital Economics, said: "Looking ahead, credit might become easier to obtain now the Funding for Lending scheme is up and running. |
| "That said, it has not prevented some lenders from increasing their borrowing rates recently. Indeed, we think weak money and credit growth is likely to act as a brake on the economy for some time to come." | "That said, it has not prevented some lenders from increasing their borrowing rates recently. Indeed, we think weak money and credit growth is likely to act as a brake on the economy for some time to come." |
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