Households repaid a record £7.4bn in consumer debt in April as they cut their spending and borrowing during Covid-19.
This is double that of March which held the previous record.
Bank of England money and credit statistics have shown that new gross borrowing fell to £11.8bn in April, roughly half its February level while repayments on consumer borrowing dropped by 19 per cent since February, reflecting payment holidays.
The majority (£5.bn) of net consumer credit repayments were on credit cards.
“This isn’t just a record level of repayments – it’s twice the previous record – because borrowing has fallen off a cliff,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown.
“This is overwhelmingly because we’re spending less. Lockdown has naturally cut all sorts of costs from commuting to socialising and leisure shopping.
“A significant minority are also picking up refunds on their cards for things like holidays. And all of us are more nervous about putting big expenses on plastic. It means we halved our spending on credit cards and other loans in April.
“Given the fact that consumer credit was growing at 10 per cent a year a few years ago, it’s astonishing that we’re currently borrowing less than we did this time last year.”
Households are also saving more, with deposits rising by £16.2bn in April and an average of £5bn per month in the six months to February.
However, the interest rate on consumers’ new savings dropped by 15 per cent in April to 0.98 per cent.
“We’ve also beefed up our savings, and have been salting away an extra £5bn a month since the crisis hit,” said Coles.
“This will come as painful news to businesses that have relied on our willingness to borrow and spend but will make it far easier for us all to weather the uncertainties that lie ahead.
“We’re already doing a lot of the right things, and most of the new money we’re putting aside is going into accounts that pay at least some interest.
“However, there’s every chance that most of this cash ends up in easy access accounts with the high street giants paying as little as 0.01 per cent.”
There was weak mortgage market activity in April with the property sector in lockdown.
The number of mortgage approvals for house purchase fell to 15,800 in April, around 80 per cent below the February level.
This was about half the number of approvals as the trough during the financial crisis, and the lowest since the Bank of England started collecting the data in 1993.