Consumer confidence is growing according to British Bankers’ Association latest borrowing data.
For the first time in four years, credit card debt is growing with further signs that borrowing is helping the UK out of the recession. Mortgage approvals are also at their highest levels since the economic crisis began in 2008.
2013 will be the first year since 2009 that unsecured credit borrowing levels has grown, credit card debt was up £76m in August according to the British Bankers’ Association.
Mortgage approvals have also hit their highest success rates since December 2009. A total of 38,228 mortgage loans were approved for house purchasing in August, this was up from 37,428 in July – remortgage refinancing was also at its highest level since 2011 at 22,665 successful applications.
The BBA’s Statistics Director, Mr David Dooks said “These figures suggest that consumer confidence is growing,” he stated “For the first time in four years annual growth in household borrowing on credit cards and personal loans has turned positive and mortgages approved for house purchase are also at their highest level since 2009.”
In the light of the good news for personal lending came a shadow of darkness as business borrowing continued to contract, however, lending to small and medium size companies stabilised which suggests the worst of the credit crunch is beginning to ease. Overall lending to non-financial business fell by £0.6bn in August, a smaller reduction than the monthly average of £1.2bn.
IHS Global Insight Chief UK Economist, Howard Archer, said the fall in real wages and income mean that people are having to borrow more to cover the costs of major purchases. However, he stated that demand for unsecured credit was relatively low compare to levels prior to the crisis. He said that many consumers remain keen to reduce their debt and the overall impression is that consumer appetite for taking on new borrowing is still limited.