Recent data from the British Bankers’ Association revealed that U.K. consumers were paying down their debt and that the amount held in bank savings accounts increased by 6.1 percent in 2012.
During 2012, net inflow into individual savings accounts totaled $30.7 billion, up by nearly 70 percent from the 2011 total of $18.2 billion. Despite interest rate cuts at the end of the year, consumers set money aside and also continued to pay off debt. New mortgages totaled $144.6 billion, but repayments totaled $143 billion, according to The Guardian.
“2012 was a year of holding on to deposits and repaying debt for companies and households,” David Dooks, the statistics director at the BBA, said, The Guardian reports.
Mortgage lending continued to underperform, as the number of loans granted each month totaled 63,000, less than one-third of the 230,000 loans approved when demand was high in 2003. Home purchases fell by two percent year-over-year, though as a result of the U.K. government’s Funding for Lending program, first-time home buyers have started to re-enter the market.
“Credit availability increased and pricing reduced towards the year-end as banks developed product offerings using the Funding for Lending scheme, which is expected to bring further benefits to households and businesses in 2013,” Dooks said, according to The Guardian.
Howard Archer, the chief U.K. economist at IHS Global Insight, said, however, that consumers are limiting their borrowing and reducing their debt in response to financial concerns.
“Consumers’ desire and perceived need to deleverage is clearly the consequence of ongoing serious concerns over the current state of the economy and still heightened worries and uncertainties over the outlook,” Archer said, The Guardian reports.