The Mortgage Finance Blog

Total consumer debt as reported by the Bank of England has fallen for the first time since records began in 1993. The report covering July 2009 reported that total net lending to individuals fell by £600m. Net secured lending (i.e. mortgages and secured loans) was down £400m, with consumer credit (unsecured loans, HP and credit cards) down by £200m despite an increase of £100m for credit card lending.

It probably isn’t great news for the policy makers in Whitehall who have been trying to increase the availability of credit. However the decline in lending is small, representing only a 0.04% reduction in total lending.
The increase in credit card borrowing shows signed that consumers are spending, implying that consumer confidence is on the increase.

The report also contains figures for mortgage approvals – mortgages that have been agreed but have not yet completed. These figures are significantly up, showing an increase on June’s data and on the 6 month average. It is likely that within the next couple of months figures will show an increase in net lending as these mortgages are completed.
The level of mortgage approvals also shows a continued increase in property purchases which is likely to fuel the current house price increases.