BBA statistics director, David Dooks said:
"November’s £8 billion of new mortgages, £7billion of new card credit and £1billion of new personal loans show that household finance continues to be provided by the banks, but until there are clear signs of improvement in the economy and stability on the international front, households and businesses lack the confidence needed to seek credit for spending or investment.
"Stocks of bank lending therefore continue to be driven down, as repayments dominate over the absence of any material rise in borrowing demand.”
annual growth rates
Annual growth of the banks’ net mortgage lending was 1.4% compared with annual market growth of 0.6% in October for mortgage lending by all lenders.
Unsecured credit contracted by 1.2% over the past year and personal deposits rose by 2.7%.
However, in the first eleven months of 2011, deposits and savings have increased by £15.8bn compared with £30.0bn in the same period of 2010, as the incentive for holding bank deposits has given way to paying down debt and using cash for household expenditure.
mortgage lending
Gross mortgage lending of £8.2bn in November was a little stronger than October and 5% higher than in November 2010.
The slight upturn in recent months in both house purchase and remortgaging approvals has led to slightly stronger gross mortgage lending, but capital repayment continues at a high level, so net mortgage lending increased by only £0.3bn in November.
number of approvals
Although retail sales rose slightly in November, partly due to retailers’ offering discounted prices, demand from consumers for unsecured borrowing remained weak. Repayment of loan and overdraft borrowing continues to outweigh new lending.
Borrowing on cards has expanded slowly over the past two years (and largely relates to interest added to accounts, because monthly spending is regularly more than offset by repayments).
business borrowing annual growth rates
The stocks of borrowing by industries are generally lower than a year earlier, as businesses have reduced their bank borrowing and relied on cashflow to fund operations.
Chris Broome of IFA, Broome Financial Planning, said:
"That people are not borrowing with the same vigour is hardly surprising given the uncertainty surrounding jobs and the economy.
"Secured or unsecured, people are avoiding debt like the proverbial plague. The news is replete with stories of recession and eurozone collapse. It's hardly an environment to engender confidence and borrowing.
"With interest rates so low, and the returns on deposit accounts negative in real terms, it's inevitable that people will use their money to pay down debt. And in many cases, this will be the right thing to do.
"Again, we have more evidence of the growth of buy-to-let, which is one of the few sectors showing any resilience.
"But the fact that buy-to-let is growing says all you need to know about the shape of the owner-occupier market in the short to medium term."
