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August 01, 2005
Consumer credit lending continues to fall
According to figures from the Bank of England, growth in consumer credit and mortgage lending both slowed in June. Consumer credit grew by only £1.28bn in June, a fall of over £700m on the seasonally adjusted figure for May. Lending on credit cards increased by £335m – the smallest monthly increase for more than four years. Mortgage lending increased by £7.5bn, compared with £8bn in May.
"The data suggest households are becoming more cautious about borrowing, pointing to continued weakness in consumer activity," said Jonathan Loynes, Capital Economics chief economist.
A decline in consumer borrowing supports expectations that the Bank of England will reduce interest rates in August.
Mortgage loans for house purchase figures, a key indication of demand in the UK housing market, remained stable at 96,000 in June. Loans for house purchases have fallen from over 130,000 a month in late 2003.
Mr Loynes said that falling numbers of loans for house purchases meant that a "hard landing" for the UK housing market was "still very much a possibility."
However, the number of loans has increased from under 80,000 last November.
Recent housing market surveys from the Nationwide and Halifax have indicated small house price growth, and both lenders have said that a market crash was unlikely.
Posted by at August 1, 2005 07:21 PM
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