Alliance & Leicester notes borrowing slowdown

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Alliance & Leicester notes borrowing slowdown

Tue 7th Nov 2006

Consumer borrowing is slowing down, according to one of the country's biggest lenders.

Alliance & Leicester claims that this drop in consumer borrowing is the first downwards trend since the early 90s.

The bank says the borrowing rate is currently at 1.4 per cent, which is significantly lower than the 11.7 per cent it averaged over the last decade.

Credit card borrowing has been on a steady decline this year, dropping lower every month between February and August.

And it seems as if consumers are keen to keep borrowing low, with five times more people expressing intentions to bring credit card debt as opposed to those saying they will charge more purchases to their plastic.

Alliance & Leicester found it is mortgage holders who are the keenest on reducing their debt.

The lender's managing director of retail banking, Chris Rhodes, says this year has been a "turning point" for British consumers.

"People are now seeing their unsecured borrowing fall relative to their earnings. We have not seen consumer borrowing this subdued since the recession of the early 1990s," he said.

"The good news is that this time the economy is performing well and employment is at an historic high."

But consumers will still be reverting to buying on their credit cards this festive season, according to Morgan Stanley Credit Card.

The provider expects a 35 per cent rise in credit card purchases this Christmas.

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