Britons flash the plastic in run-up to Christmas

Britain's consumers are continuing to use their credit cards despite the hike in interest rates, spending a record ?11.56bn on their plastic during November, well up on last November's figure of ?10.14bn, the Bank of England announced today.

However, strong repayments meant that overall credit card debt rose by just ?574m during the month, considerably down on October's jump of ?693m and the ?818m rise recorded in June. Consumers now owe a total of ?52.92bn on credit cards.

The total value for unsecured lending (where money is borrowed on credit cards, personal loans and overdrafts) was the second highest on record, with people borrowing ?17.58bn during November, although after repayments were taken into account, total consumer credit rose by a more restrained ?1.62bn. This figure is higher than the previous month's ?1.4bn, but down on September's ?1.81bn.

Mortgage lending also showed signs of slowing during November, with total lending reaching ?24.42bn. This is the third highest figure on record, but it still represents a drop from October's ?25.28bn. Net lending, which strips out redemptions and repayments, was ?8.61bn, compared with ?9.45bn the previous month.

The Bank's figures also showed that mortgage approvals were slightly subdued, with the value of all loans approved ?25.89bn, ?700m lower than the average for the previous three months. Around 115,000 loans were approved for house purchase during the month, compared with an average of 117,000 in the three months to the end of October. However, if the figure is adjusted to take into account the number of working days in the month this rose to 119,000 compared with 116,000 in the previous three months.

The Bank also released figures today showing that homeowners withdrew a record ?13.43bn of equity from their properties during the three months to the end of September. The figure is well up on both the ?11.24bn withdrawn during the previous quarter and the ?9.81bn taken out in the third quarter of 2002.

Britons are increasingly cashing in on the housing boom by withdrawing money from their homes to finance large purchases or consolidate debt. Under equity release schemes lenders allow homeowners to increase their mortgages in exchange for a cash lump sum if their property is worth more than the original sum they borrowed.

Historically low interest rates and double-digit house price inflation have led to a steep increase in equity withdrawal in the past couple of years. During the three months to the end of September money withdrawn from properties represented 7% of people's post-tax income, nearing the peak of 7.7% reached in 1988.