Households Lower Appetite For Unsecured Borrowing

Figures revealed by the British Bankers Association (BBA) show the demand for unsecured credit is falling with net lending decreasing by £2bn in 2010. The figures reflect a turbulent time for both the economy and its consumers, with job cuts and Government spending cutbacks increasing the pressure on households. Credit card purchases also declined over the last twelve months, although at a slower rate than loans and overdrafts.

unsecured lending annual growth rates

(Source:British Bankers Association, 2011, High Street Banking, BBA)

Whilst the fall in all forms of unsecured borrowing has been widely welcomed, some experts have sounded a note of caution.  As there are no officially recorded statistics on payday loans borrowing, it has been suggested that the reduced supply of High-Street credit has simply displaced demand to more expensive sub-prime markets.

BBA Statistics Director, David Brooks said, “Unsecured credit demand was also weak during last year, with net lending reducing by £2bn as households adopted a lower appetite for credit due to the uncertain environment for employment and the economy.”

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