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Credit card spending and mortgage borrowing fall in March
(WebFG News) - UK households spent less on credit cards and mortgages for property purchases slumped in March, suggesting increased consumer caution as well as a hit from the Beast from the East.
Credit card spending fell 1.2% in March from a year earlier to £9.7bn and repayments outstripped new lending in the first quarter, figures from UK Finance showed. Spending may have been affected by the Siberian weather system - labelled the 'Beast from the East' - that froze Britain and caused a slump in retail sales that month.
Gross mortgage lending fell 2.3% to £20.5bn as the number of approvals for house purchases dropped 21% to 38,710. Remortgage approvals fell 6.4% to 27,057.
Households increased their deposits at banks and building societies by 1.8% to £846.9bn. At high street banks, deposits rose 4.8% to £639.4bn. Overdraft repayments also increased.
The figures suggest households may be exercising caution as the economy slows and amid speculation about when the Bank of England will approve a further increase to interest rates. Transactions in the housing market have fallen sharply, especially in London, as buyers grow wary of paying high prices.
Samuel Tombs, chief UK economist at Pantheon Economics, said: "Mortgage approvals continued on their downward trend in March, demonstrating that consumers aren't confident enough to make major financial commitments. As with all March data, bad weather might have depressed activity. Demand, however, has been weakening steadily for a long time."
Tombs said the downturn in mortgage lending had gathered momentum since November, indicating the BoE's signal that more rate rises were ahead had made many households reluctant to take on more debt.
Eric Leenders, managing director of personal finance at UK Finance, the financial industry's trade body, said: "March figures show that consumer borrowing was fairly modest, with card spending down and repayments outstripping lending in the first quarter of 2018. Growth in personal deposits also increased over the year, alongside a rise in overdraft repayments."