The latest figures released by the British Banker's Association have indicated that the UK credit card industry has witnessed a drop in lending for the first time since 1993, having fallen by GBP1.8 billion in 2006. However, in contrast, mortgage lending has increased.
The findings showed that, overall, in 2006, net mortgage lending rose by GBP66.8 billion, 20% more than in 2005, loans and overdrafts increased by GBP4.2 billion, 15% less than in 2005, while credit card lending fell by GBP1.8 billion in 2006, compared to an increase of GBP1.6 billion the previous year.
2006 was notable for contrasting trends in secured and unsecured personal lending, said David Dooks, the British Banker’s Association’s (BBA) director of statistics. Whilst mortgage demand remained robust, despite the housing market experiencing 7% annual price inflation and an expectation of rising interest rates throughout the second half of the year, the appetite for consumer credit clearly waned, as reflected by the significant contraction in credit card borrowing.
According to uSwitch.com, Mr Dooks also claimed that rising utility tariffs and the increase in fur and transport prices had forced consumers to seek other means of financial aid, along with a shortage in 0% APR deals on credit cards.