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Debt figures for March

The latest figures from the British Bankers` Association (BBA) have now been released, showing us how much debt people took on - and paid off - in March.

Gross mortgage lending in March (£8.7bn) was the same as in February, and lower than the average over the last six months (£9.2bn). The figure was also 0.4% lower than the figure for March 2009.

Mortgage repayments were particularly strong, since banks `actively encouraged borrowers to use surplus cash to reduce their borrowing where possible`. So in March, net mortgage lending (new lending minus repayments) grew by just £2.4bn - lower than the £2.7bn we saw in February, and a fair bit lower than the previous six-month average (£2.9bn).

Approvals of mortgages for house purchase dropped sharply at the start of this year when the stamp duty holiday came to an end. Even so, there were 20% more approved in March this year than in March last year, since the number had increased considerably throughout 2009.

Consumer credit (unsecured debt) actually contracted over the year, by 1.7%, due to subdued spending.

As for credit card debts: the number of transactions was 1.3% higher than a year ago, `reflecting the growth in official retail sales volumes`. The average transaction value, though, was down about 5% compared with the same time last year - so the actual value of new spending was 4.5% lower in March 2010 than March 2009.

David Dooks, BBA statistics director, commented: "Low interest rates continue to influence customer behaviour. Homeowners are reducing mortgage debt by making, or maintaining, higher repayments using the extra cash generated by lower mortgage rates. People are also holding more cash in their everyday accounts, rather than building up savings accounts and overall unsecured borrowing levels are standing still.

"Uncertainties in business trading are constraining company demand for finance, with large corporate sectors still seeing contractions in borrowing."

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