Consumer lending slows in February

The British Bankers Association (BBA) has released February 2017 figures for the high street banks. The data shows that household borrowing of £13.4 billion in February was 4.6% higher than in the same month last year.

Main highlights included:

•  The BBA’s latest high street banking data show that consumer credit is growing at an annual rate of 6.6%.
• Gross mortgage borrowing of £13.4 billion in February was 4.6% higher than in the same month last year. After allowing for repayments, February’s net mortgage borrowing was 2.5% higher than in February 2016.
• Business borrowing continues to be subdued growing by 0.9% annually.

Eric Leenders, BBA Managing Director for Retail Banking said: “Elevated approval volumes for house purchases and re-mortgaging experienced during the winter months fell back in February, to average levels seen throughout most of last year. Consumers’ use of credit cards and personal loans reflect last month’s increased spending figures. Businesses continue to exercise a cautious approach to borrowing, using cash reserves and alternative lending sources to finance their operations.”

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Annual borrowing growth rates

Household borrowing

Gross mortgage borrowing of £13.4bn in the month was 4.6% higher than in February 2016.

Net mortgage borrowing was 2.5% higher in February than a year ago.

Consumer credit annual growth in February was 6.6%. There was some slackening in the annual growth rate for personal loans and overdrafts while that for credit card strengthened slightly.

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Number of approvals

Mortgage approvals

House purchase approval numbers of 42,613 were 4.6% lower than in February 2016 and 3.5% lower than January but above the 2016 monthly average of 41,287.

Remortgaging approval numbers of 25,414 in February were well down on January’s numbers and a little lower than the 2016 average of 25,987.

Other advances were 4.8% higher than a year ago.

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Business borrowing annual growth rates

Borrowing by non-financial companies

Borrowing by non-financial companies decreased by £1.6bn in February as some short-term borrowing unwound.  The annual growth rate was 0.9% in February, lower than in recent months.

Net capital market issues in January and February 2017 were £1.4bn (net) compared to £5.5bn (net) in the first two months of 2016.

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Trends in net deposits

Deposits

The annual growth in personal deposits in February continued at 4%.

Non-financial companies deposits grew at an average annual rate of over 8% in 2015 but fell back in 2016 to an average annual rate of 5% and are currently growing at an annual rate of 4%.