New figures have been released by the British Bankers’ Association (BBA) which show that the amount of debt individuals owe on overdrafts and loans currently stands at 52 billion – the lowest level for a decade.
The BBA said that both householders and businesses are approaching debt cautiously in the current economic climate. There was a small increase in the number of mortgages approved in July, however.
People are increasingly using the funds already available to them to cover essential outgoings in a bid to avoid borrowing more money. This is having an impact on the amount people are able to save.
High street banks did see an increase in savings and personal deposits in July, but the year-on-year figures give a clearer picture. Savings and deposits totalled 8.6 billion in the first 7 months of this year, compared with 16.3 billion during the same period in 2010. Credit card borrowing increased month-on-month, mainly as a result of interest charges.
Question marks remain over the health of the mortgage market. Interest rates are low, but the number of mortgages approved reveals very little. 33,717 mortgages were approved in July, which is a slight increase on June and a bit better than the same month last year, but experts say the September and October figures will give a clearer picture of how the market is performing. If numbers increase after the summer holidays, this would be a good sign, according to Brian Murphy at the Mortgage Advice Bureau. However, he said any predictions on this would amount to little more than speculation. He added that if borrowing remains subdued, this will be due to the cost of living rather than the lending environment.
Businesses are equally reluctant to get into additional debt. This reflects the slow rate of growth that characterises the UK economy at present, according to the BBA.
Speak to a debt management specialist today to discuss options for reducing your monthly outgoings.