According to a recent report the borrowing levels of consumers in the UK are being affected by uncertainty over their finances. Officials from the British Bankers Association have said that households’ uncertainty over their finances is leading to lower levels of borrowing, with net mortgage lending amongst UK lenders at its lowest level in eight years in April, standing at £2.7 billion.
Whilst the amount that was borrowed in terms of mortgages was at its lowest in eight years in April, there was a slight increase in the actual number of mortgages that were approved for the month.
There was no change in the level of personal loans granted by UK lenders for that month compared to the previous month. However, compared to a year ago personal loan levels were down by nearly 40 percent.
An official from the BBA said: “Households’ uncertain financial circumstances not surprisingly continue to dictate consumer behaviour, both in the housing market and in generating only low demand for new personal loans.”
The figures also showed that there had been a sharp drop in remortgaging levels, with the number of remortgages in April falling to the lowest level since 1999.
One mortgage broker stated: “Other loans, specifically remortgages, continue to decline as people take a ‘wait and see’ approach. For those at higher loan-to-values, this could prove very costly, as the general consensus is that fixed rates are as cheap as they are likely to get, with lenders anxious to keep their margins high in order to claw back some much needed profit.”
Another industry expert said: “Even if people have the funds at their disposal, to actually commit in this turbulent, uncertain market is a leap of faith that many are simply unwilling to make. This is a demand-led, as much as a supply-led slowdown.”
