UK credit card lending hits six-year low

Credit card lending in the UK was down at its sharpest rate in six years in July the Bank of England said which dimmed hopes of consumers helping the country out of recession.

The figures were published alongside data on mortgage lending that also added to concerns about growth and although mortgage approvals were up in July it suggested a deterioration in the housing market conditions, according to analysts.

According to some analysts weak money and credit growth would  act as a brake on the economy for some time to come.

 Analysts said the increase in mortgage approvals in July was simply a bounce-back from the two extra bank holidays in June so it did not imply an improvement the housing market rather if anything, the fact that mortgage approvals were still well below their level in May pointed to a further worsening.

Households are cutting borrowing to get their debts under control, with savings rates hitting levels not seen since the late 1990s  even as real disposable incomes fell.
The decline reflected in the credit card lending figures, which fell by £147 million in July, the sharpest fall recorded since a £150 million decline in August 2006.

Personal loans and advances, another form of consumer credit, were down by £73 million – a slightly smaller decrease than the previous month, while net lending increased £1.13 billion in July even as net consumer credit fell by £220 million.