August 18, 2006

By Peter Kenny

Figures released today by the British Bankers’ Association (BBA) reveal unsecured lending is becoming more subdued with credit card borrowing falling by £0.3bn during the month of July.

Unsecured lending rose by £0.3bn overall in July which is the same level it has been for the previous six months.

Personal deposits increased by £2.1bn, a reduction from £3.1bn for the previous six months.

Mortgage lending rose £5.7bn, a figure that was slightly above June’s, amounting to £5.6bn and significantly higher than the previous six-month increase of £5.3bn.

The BBA director of statistics, David Dooks, used the word “divergent” to describe the status of secured and unsecured lending and this certainly seems to be the case with UK consumers starting to shift their focus from unsecured lending and plan any borrowing they need on a longer-term footing.

Mr Dooks also said, “Weaker deposit growth could also partly reflect the management of short-term personal finances becoming more focussed, with more borrowing requirements being planned on a longer term basis"