Consumers have available to them some of the lowest interest rates seen in history.  Homeowners and hopeful home buyers have had available to them rates not seen before such as below 3% interest rates.  However consumers seem to be keen to cut down debt rather than add to it no matter the low interest rates currently available.

According to the British Banker’s Association (BBA) the amount of outstanding loan amounts are at half the level they were in early 2008 when the debt level was at its peak.  Consumers are seeking to lower debt and increase their savings.  The savings pursuit is being hindered by the same low interest rates that are making loans available at cheap rates.

The BBA’s data revealed that the number of mortgage approvals for August was down when compared year to year but in comparing month to month there was an increase.  In July the mortgage approvals were at 56,282 and in July the approvals were at 59,631.  The remortgage market also had the same results with an increase from July to August at 17,558 approvals growing to 15,895, yet the level was down when compared to August 2011.

David Dooks, BBA's statistics director, remarked, “People are acting conservatively in this weak economic environment, maintaining debt repayments and building up deposits, particularly in Isas."

Howard Archer, chief UK economist with IHS Global Insight, remarked on the BBA data saying, “This net mortgage repayment in August reflects both muted housing market activity and high capital repayments.

“This supports the view that house owners are looking to take advantage of low mortgage interest rates to reduce their outstanding mortgage levels to improve their balance sheets.”