Mortgage lending continues to grow

Consumers' appetite for unsecured borrowing waned in December, but mortgage lending continued to strengthen, the Bank of England said today.

The Bank's figures show the increase in total net lending to individuals rose by £9.6bn in December, in line with November's figure and £0.8bn higher than the previous six month average.

Mortgage lending rose by £8.8bn - 1.2% higher than the six-month average - and outstanding mortgage debt now stands at £965.2bn.

The Bank said December had also been a strong month for mortgage approvals, with 122,000 home loans totalling £29bn offered during the month. This was 6,000 higher than in November and the highest number since May 2004.

However, the number of remortgagors was down 2,000 on the previous month.

And consumer credit, which includes loans, overdrafts and credit cards, showed further signs of a slowdown. Borrowing rose by just £0.8bn, down from £1bn in November and the six-month average of £1.2bn.

There was hardly any growth in credit card borrowing, despite December being one of the busiest shopping months of the year, and the growth was driven by an increase in lending through loans and other forms of credit.

The annual growth rate of consumer credit continued to fall, to stand at 9.3%. At the end of 2005 as a nation we owed £193.3bn through unsecured debt.

The Bank's figures back up those from other sources showing consumers turning away from extra debt.

Earlier this month card provider Visa revealed a year-on-year fall in spending on credit cards for the first time, and last week, insurer Legal & General said it believed Britons had turned their attention to saving after years of taking on debt, reporting that last year saw a record £24bn paid into its products.