New borrowing shunned in favour of debt repayment

The Bank of England has confirmed that £400million of unsecured loan debt was repaid in the UK in the month of December, the time of year normally associated with excessive spending and increased debts.

The figures mark an unusual trend sweeping the UK, of new borrowing being shunned in favour of debt repayment. New mortgage approvals and credit borrowing are down, while unsecured loans are being repaid at a record rate, and mortgage borrowers are also choosing to overpay on their monthly payments to increase their equity share in the property and bring down the level of debt secured on their homes as quickly as possible.

Mortgage borrowing is not expected to increase anytime soon, though there is speculation that unsecured loans and credit card activity could come back as redundancies in the public sector start to begin, and households find themselves having to bridge economically as they readjust.

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