By: Mike Campbell
Much concern has been expressed about the UK’s level of personal debt. The debt is largely racked up on credit cards, through unsecured loans or on bank overdrafts. One consequence of the global recession has been that money on deposit has earned almost no interest – this was intentional on the part of the authorities as a measure to boost consumer spending and to make “cheap” money available to the business community. It seems that some people have taken advantage of the downturn to reduce their personal debts by repaying them as UK consumer credit has fallen for the fifth straight month. In November, £376m more was paid back by British consumers than borrowed. Over the previous 12 months, £7.85bn more has been repaid than borrowed as UK consumers have resisted the temptation to take out loans to pay for expensive items such as new cars, home improvements or expensive holidays. Against a backdrop of relatively expensive unsecured loans and credit card APRs and with very real fears over job security, it seems as if Britons may have rediscovered prudence.
Mortgage Lending Eases Further
The supply of money to purchase new homes almost dried up in the early phase of the recession, putting increased pressure on the declining house price. The second half of 2009 saw a rally in housing prices as demand outstripped supply and mortgage strictures were eased, letting more people back into the market. November saw the highest rate of mortgage approvals since March 2008 at 60 518. The criteria for obtaining a mortgage have also eased with 60% of loans now requiring a 25% deposit, down from 62% previously. 30% of all mortgages require the buyer to make a down payment of 15 to 20% although some mortgages needing no down payment or just 10% can be obtained (subject to status, of course!).
UK Consumers Show Personal Debt Restraint
DailyForex.com