Savers have had little returns from their funds Consumer borrowing - excluding mortgages - recorded its biggest month-on-month fall since Bank of England records began in 1993. This adds further evidence to the likely trend of people paying off loans rather than saving more during a time of low interest rates. Unsecured loans fell by £713m in October compared with September. But the number of mortgages approved for house purchases rose for the 11th month in a row in October. The number of homeowners remortgaging remains subdued. Debts repaid Borrowing on credit cards rose by £134m in October compared with September, but was more than offset by the record fall of £713m in other forms of consumer credit such as bank loans, loans for cars, and hire purchase agreements. There is little incentive for people to increase savings whilst the Bank Rate remains at its current low level

Adrian Coles, BSA It was the fourth month in a row that people repaid more than they took out in non-mortgage borrowing. The total stock of outstanding unsecured loans stood at £228bn - a similar level to January 2008. Separate figures from the Building Societies Association (BSA) showed that there was a net outflow of savers' funds for the eighth consecutive month. "There is little incentive for people to increase savings whilst the Bank rate remains at its current low level, and many may opt to repay debt instead," said BSA director general Adrian Coles. "Building societies and other deposit-takers are also facing heightened competition from institutions with a government guarantee, which is creating further distortions in the savings market." Howard Archer, chief UK and European economist at IHS Global Insight, said: "The record, and fourth, successive net repayment in consumer credit in October is clearly the consequence of many consumers' desire to reduce their debt, low demand for credit and a lack of availability of unsecured credit from banks." Mortgage lift The Bank of England data showed that mortgage approvals for house purchases rose to 57,345 in October, up by about 1,000 from the previous month and 18% higher than a year ago. New mortgage lending has risen steadily since the depth of the credit crisis last November, but remortgaging remains subdued - having fallen slightly again. "Significantly, net secured lending rose by a little over £3bn in the three months to October compared with just £443m in the previous three-month period," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. "While this is still way down on the level of lending seen at the height of the boom in the market, it does suggest that that there is now a little more give from lenders."



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