Demand For Personal Loans Fell In June

The demand for Personal loans fell in June and was 19% lower than 12 months ago, the latest figures from the British Banker’s Association (BBA) show.

Consumers seem to be tightening their belts in response to the recession and lingering fears over job security as the amount borrowed for personal loans fell in June and was almost a fifth lower than a year ago.

With consumers taking more care with their spending, there is a greater reluctance to borrow so the amount of consumer credit has fallen by 2.7% this year and is likely to continue to decline throughout the year.

Although the total number of purchases made by credit cards rose in June, the greater focus on making credit card repayments more than matched the raised spending levels meaning that net credit card borrowing fell also.

It also appears that there is a great appreciation of saving money as the amount of personal deposits in high street banks has risen by 5.5% over the last twelve months.

Gross mortgage lending was slightly below the average of the past six months, however net lending, which is the total lent minus any mortgage repayments actually increased by £2.1bn in June, however that increase is still lower than in June 2009.

As David Dooks, BBA statistics Director says: “The banks’ mortgage lending position was little changed in June. The abolition of HIPs and a reported increase in the number of house sellers is expected to encourage activity in the market, though this may be tempered by households’ uncertainty over job prospects and the impacts of fiscal tightening.”