UK consumers are more cautious about borrowing on credit cards and loans but mortgage lending is on the rise, according to figures released by the British Banking Association (BBA).
The banking trade association said that net mortgage lending rose by an underlying GBP5.4 billion in March, higher than the GBP4.9 billion average over the last six months. In contrast, unsecured personal lending fell by GBP0.4 billion, compared to an average rise of GBP0.5 billion in the previous six months.
Consumers are not only borrowing less, but saving more. Deposits into bank accounts increased in March by GBP4.8 billion, higher than the average growth of GBP3 billion. The BBA said that the extra inflows reflected the high take-up of attractive interest rates offered by some financial institutions, such as cash ISAs.
David Dooks, BBA director of statistics, said: The contrast between stronger mortgage lending and net repayments of unsecured borrowing suggests that individuals are optimistic about the housing market, though careful about card borrowing, overdrafts or taking on personal loans.
When deposit growth over recent months is also taken into account, the aggregate financial position of the personal sector as a whole does not appear to be under strain.