Total Borrowing Is Depressed As Borrowers Pay Back Millions More Than They Borrow

The Bank of England has announced that for the at the outset time for the reason that it changed its counting methods in 1993, borrowers have paid back to the lenders more than they have taken out. Net borrowing really fell significantly in July 2009!

With a combination of borrowers being able to afford additional repayments to their mortgages due to the enormously low interest rates that we are at this time experiencing, combined with the effect of lenders being a lot tighter with the loans they are giving out, over the month of July net mortgage borrowing in the UK actually fell by £418m.

And it is not only in the field of mortgages in which lenders have seen more money coming back in then they have handed out. The total amount of credit card balances, overdrafts and personal loans also fell over the month by around £200m. Although the trend is not all one way. The total net credit card borrowing increased over the month of July by £100m, whereas overdrafts and personal loans fell by £300m.

Another interesting trend is that it seems that borrowers with creating Societies are more probable to be repaying mortgages than borrowers with banks. making Society mortgage borrowing fell by around £517m in the month of July. At the same time, the number of mortgages taken out in July continued to be on the increase, hitting over 50,000 in July, which is 20% over the half 12 months average. The total amount borrowed hit a massive £6.7bn, over a third above the six month average.

But these figures do not necessarily intend the end is in sight for the recession, not that a recovery is on the cards. Whilst clearing debts is a sensible reaction and no doubt what the Bank of England intended when it last reduced its base rates, various months ago, it can intend that instead of people spending and putting money into the economy, they are saving for their future by reducing their debts. It seems that consumers are more concerned in defending their future than they are spending money and enjoying themselves at the moment. August is expected to also show a further dip, due to seasonal variations as people take their annual summer holidays, although these could just increase credit card borrowing further.

The trend at the moment is for borrowers completing their current deals to peek around and remortgage instead of merely accepting their lender’s standard variable rate. Comparing best mortgage rates is an good way of saving a number of cash in these troubled times and there are a lot of ways of doing this, because loads of people are learning. If you want to reduce your own borrowing then this is a good way to start.

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