Vip News : Lending is robust, but credit card spending weak in August

LONDON - The mortgage lending segment picked up in the month of August after showing poor growth in the previous months, providing fresh evidence that the property market was heading towards sunnier days.

The British Bankers' Association released the figures for the month of August on Tuesday and these figures show that the lending market grew by £4.3 billion in the month. This figure was substantially higher than the dismal £3.7 billion posted in July. The Council of Mortgage Lenders substantiated the BBA's figures by reporting that the gross mortgage lending stood at £27.5 billion in August.

This was the highest level since last July and was 4 percent higher than what was posted at the same time last year. Commenting on these figures, BBA director of statistics David Dooks said, "After fluctuations in June and July, August saw mortgage lending return to the very stable trend that we have seen throughout the year." CML Director General Michael Coogan echoed his sentiments, "Although the market remains far from spectacular in terms of transaction numbers and house prices, the prospects of a significant market correction are receding," he said.

In a separate set of figures, the BBA said that spending on credit cards dipped in August belying the fact that consumers continued to exercise a tight hold over their purse strings. The total borrowing fell by £146 million in August as consumers preferred to pay back what they owed rather than stack up fresh debts. This is the second time this year that borrowing has actually lessened. "For the year as a whole the increase in borrowing on credit cards is markedly lower than in the whole of last year. This weakness on cards ties in with the very weak retail sales data and reflects consumer caution in relation to their borrowing." David Dooks commented.

Sales have been pretty flat so far with just a 0.8 percent increase in August.

Posted on : Tue, 20 Sep 2005 20:05 GMT | Credit Cards News
By : Rob Davis