Borrowers pay back £400m in month

Jan 31 2012

A record £400 million was repaid from personal borrowings in December as consumers continued to shrink their debts, the Bank of England has said.

The net repayment of £400 million in unsecured loans is the largest since records began in 1993 as analysts said heightened concerns about the wider economy and jobs were making consumers lose their appetite for borrowing.

Credit card borrowing was also flat for the third month in a row according to the latest Bank of England figures, despite the Christmas season.

Mortgage approvals rose to a two-year high in December, but analysts said the housing market remains weak compared with long-term norms, and is likely to come under further pressure from unemployment and low confidence.

The number of loan approvals for house purchase rose to 52,939 in December, the highest figure since December 2009 and an increase of just over 300 on the November.

Samuel Tombs, an economist at Capital Economics, described the latest figures as "disappointing" and said they showed the recent recovery in mortgage approvals had "ground to a near halt".

He said: "The monthly rise of 300 in the official measure of mortgage approvals for new house purchase to 52,900 was well below the consensus expectation of a rise of more than 1,000."

The value of the mortgage approvals stood at £7.5 billion, unchanged from last month's figure.