Consumers are still paying down debt according to the British Bankers Association (BBA).  While their report for November revealed that lowering debt was a goal there was still a large number of mortgages approved which resulted in a ten month high for the second month of the final quarter of the year.  This could signal a strong closing to the year in mortgage lending.

There were 33,634 mortgages approved and that was an increase over the previous month of 33,128 but it was still short of the 34,137 approved in November of last year. 

The same report revealed that while new mortgage borrowing amounted to £7.7 billion there was £7.5 billion of mortgage debt paid in November.  Credit card debt amounted to £7.3 billion with debt payoff amounting to £7.5 billion.

David Dooks, BBA statistics director, remarked, “Households are continuing to repay virtually as much as they borrow and, as people hold on to cash, deposits are growing by 6% annually. The situation is not dissimilar in the business world – businesses are holding back investment or expansion plans and building up cash reserves.”

Howard Archer, chief economist with IHS Global Insight, responded to the report, saying, “The November figures need to be put into perspective, as mortgage approvals are still low compared to past norms. While mortgage interest payments as a percentage of disposable income are currently very low, other affordability measures are not so favourable with the house price/earnings ratio above its long-term average.”

It should also be noted that the new mortgage lending includes many deals with historically low interest rate deals as lenders continue to be competitive for borrowers and are offering better and better mortgage and remortgage offers.