Demand weakening for business and personal loans
LONDON (ShareCast) – The growth in lending amongst Britain’s banks continued its steady decline in November (Stuttgart: A0Z24E – news) .
Gross mortgage lending in November was £8.2bn, 5% up on November 2010 but increasing repayments mean net mortgage lending only increased by £0.3bn last month.
There were 72,376 approvals for house purchases in November down 4% on October.
Interestingly, despite growing retail sales, the BBA says unsecured lending, that is credit card purchases and overdrafts, “remained weak”. Net (Frankfurt: A0Z22E – news) consumer credit lending was minus £0.2bn in November meaning more people were repaying their debts than racking up higher balances.
The total remaining credit card balances were £35.7bn, loans and overdrafts stood at £50.6bn.
The BBA says “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.”
Businesses have significantly reduced their borrowing since January.
Loans to construction firms have picked up somewhat since a big slump in February of last year when the growth rate for loans was nearly 25% down. It is now around 10% down.
The biggest fall has come from manufacturers whose rate of borrowing has dropped by 20% since November 2008.
Net lending to non-financial businesses was minus £0.7bn in November, the total outstanding amount is £311.8bn.
Lending to financial businesses dropped a whopping £20.2bn in November leaving a total balance of £329.3bn.
The BBA’s statistics director David Dooks said: “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.”
There will be accusations, however, that banks, scared of the international economic picture, are making it too difficult for individuals and businesses to borrow.
BS
Article source: http://uk.finance.yahoo.com/news/Demand-weakening-business-digilook-1780706737.html?x=0
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