The consumer credit market continued to weaken in January while the mortgage market was relatively strong, Bank of England data has shown.
The bank’s consumer money and credit data revealed that consumers made net repayments of £2.4bn in January, which compares to an average net repayment of £1bn between September and December and was the largest since May.
The decline reflects less new borrowing. As a result, the annual growth rate fell further to -8.9 per cent, the lowest since records began in 1994.
Read more: Consumer credit market remains weak
Within consumer credit, the weakness reflected net repayments on credit cards (£2.2bn), which had saw its annual growth rate fall to a record low of -19.4 per cent and some repayments of other forms of consumer credit (£200m).
These other forms of consumer credit had its annual growth rate fall to -3.9 per cent, the lowest since October 2010.
Meanwhile, the mortgage market remained relatively strong in January with people borrowing an additional £5.2bn secured on their homes, compared to the monthly average of £4bn in the six months to February 2020.
In January, the number of approvals for house purchases, an indicator of future lending, was 99,000. While this was a little lower than December’s 102,800 it was well above the monthly average in the six months to February 2020 (67,900).
Elsewhere, small- and medium-sized enterprise bank borrowing was little changed. In January they drew down an extra £500m in loans.
“The pipeline of property purchases in the UK housing market remains strong, with mortgage approvals in January still well above pre-pandemic levels,” said Paul Stockwell, chief commercial officer at Gatehouse Bank.
“It suggests buyers have not been deterred by the March stamp duty deadline as approvals dipped by only 3,800 compared to December, and lending was more than 20 per cent higher than the pre-pandemic six-month average.
“If the stamp duty discount is extended in the Budget this week, it will likely provide a fresh boost to purchase demand, and we could quickly see another surge of interest from buyers.”