Repayments outpace new borrowing

Consumers have paid back personal loans, credit cards and overdrafts at the fastest rate for more than a year as their appetite for borrowing remains weak, according to a new high street banking report.

Repayments have outstripped new borrowing. A net repayment of £305 million in consumer credit lending in February was the highest net repayment since January last year, the British Bankers’ Association (BBA) said.

New spending on credit cards totalled £7 billion, but cautious consumers paid off more than they spent, repaying £7.3bn, continuing a long-standing trend.

The number of mortgage approvals for house purchase fell back from January’s two-year high of just under 38,000 to 33,103 as interest from first-time buyers dropped off.

Estate agents and lenders have previously been reporting a surge in interest from first-time buyers looking to take advantage of a stamp duty concession, which ends tomorrow. But house purchase approvals dropped off to more “normal” levels as demand from first-time buyers seeking to beat the stamp duty deadline fell back.

BBA statistics director David Dooks said: “Businesses and households continue to be cautious about their finances in the face of difficult economic times.”