Borrowing and savings continue to grow

Posted by Rebecca Stains in Banking on 30 January 2015 - Rebecca worked as a Credit Analyst at checkmyfile until 2015

As the economy continues to recover, figures from the British Bankers' Association (BBA) show that both borrowing and saving by customers of the UK's main banks picked up during 2014. BBA says that last month the annual growth in consumer borrowing has increased at the fastest rate seen in six years. This includes people taking out credit cards, overdrafts and personal loans.

Recent deposits into Individual Savings Accounts (ISAs) were up 57% on the previous year. This is due to the new higher annual limit of £15,000 that was introduced in July 2014. Unsecured borrowing by customers has also increased by 3.8% during the year, the fastest growth rate since 2008. Spending on all credit cards rose by 4% during 2014.

Richard Woolhouse of the BBA says, "Robust employment data is making many of us feel more secure in our jobs and optimistic about our futures”.

This has caused consumer’s confidence to grow; they are now more inclined to not just borrow but to also save for the future.

He adds that this change is, “now feeding through to personal lending and credit card data, suggesting people are happy to finally replace the car or spend on household improvements”.

Mortgage lending by the major banks did, however, fall towards the end of the year, in line with a cooling down period in the property market. But despite this fall, total mortgage lending by the big banks rose by 18% in the year to £130bn, and the number of new mortgages approved by the banks still rose by 9% during 2014.

“The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year", says Mr Woolhouse.

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