A new report from the British Bankers Association has revealed that consumers are increasingly adopting a ‘wait and see’ approach to their finances as they wait to see what is going to happen next with interest rates.
As a result the demand for loans is remaining low, as more and more consumers choose to pay off debts, and borrow less as they are unsure about the state of the economy.
The BBA, who represent Britain’s high street banks, explained that it wasn’t just consumers, but businesses who were adopting the same attitudes.
Demand for home loans was also well down in April, and the repayment of personal loans in April was £181million higher than new borrowing for the month.
The BBA believe that the obvious lack of demand for new home loans shows consumers are now taking a safety first approach to their finances.
People applying for mortgages to buy new houses also fell, down 6% in April compared with March, and 18% lower than April last year. Just 29,335 new mortgages were approved in April.
Not only were prospective buyers stifling their activity but also those who already have a house and were thinking of switching to a new deal. Only 20,844 people remortgaged in April, 12% lower than the previous month and 7% down on April of last year.
BBA statistics director, David Dooks said, “Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a wait and see attitude,”