ANNUAL growth in personal loan and overdraft borrowing slowed in March, data from the main high street banks has revealed.
Lending figures from banking trade body UK Finance shows personal loan and overdraft lending increased 2.4 per cent last month, down from 3.2 per cent in February and more than half the rate of 6.1 per cent recorded a year before.
There was £6.1bn of borrowing on overdrafts during March and £1.6bn on personal loans.
Credit card lending also slowed from 6.3 per cent in February to 5.8 per cent in March at £9.7bn. However, this was still above the 5.3 per cent growth recorded in March 2017.
“March figures show that consumer borrowing was fairly modest, with card spending down and repayments outstripping lending in the first quarter of 2018,” Eric Leenders, managing director for personal finance at UK Finance, said.
“Growth in personal deposits also increased over the year, alongside a rise in overdraft repayments.”
Business lending growth also slowed to 0.3 per cent in March, from 0.5 per cent in February and 3.6 per cent a year before.
“Overall lending to businesses of all sizes is marginally up year on year,” Stephen Pegge, managing director of commercial finance at UK Finance, said.
“This mixed economic outlook is expected to continue in the coming months, as rising wages and output growth are counter-balanced by uncertainty over Brexit impacting on longer-term investment decisions.”
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The banks also estimated that gross mortgage lending in March 2018 was 2.3 per cent down annually to £20.5bn, but up on the £19bn lent the previous month.
John Goodall, chief executive of Landbay, said the peer-to-peer buy-to-let platform is seeing more demand.
“Mortgage lending activity was fairly modest in March but remains up on last month’s levels,” he said.
“Many are clearly still eager to take advantage of the record low interest rates and loan-to-value deals on the market. As far as buy-to-let mortgages go, there has been significantly more demand than at this point last year with a raft of two-year fixed deals reaching maturity following the stamp duty rush of 2016.
“It will be interesting to see how traditional banks react in the next few months to the Bank of England’s Term Funding Scheme ending, and the impact that this will have on lending volumes.”