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Record Borrowing Seen As Paying Of Unsecured Debt

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Consumers are taking out more mortgages than ever before


Consumers are taking out more mortgages than ever before, but paying off their unsecured personal loans, overdrafts, and credit cards as a result, according to figures from the British Bankers' Association (BBA).
The data shows that in March mortgage lending rose from £4.7 billion to £5.4 billion, while consumers paid off £145 million of their loans and overdrafts and £211 million of their credit card debt, a fact that is puzzling analysts.
David Dooks, BBA Director of Statistics, explained:
"The contrast between stronger mortgage lending and net repayments of unsecured borrowing
suggests that individuals are optimistic about the housing market, though careful about card borrowing, overdrafts or taking on personal loans".
Howard Archer, Chief UK Economist at the Global Insight consultancy added: "We admit that we have been surprised by the recent strength of house prices.
"We still believe that affordability constraints, elevated debt levels, moderate earnings growth and a weaker labour market will increasingly kick in over the coming months to dampen housing market activity and contain prices over the longer term."
Record high debt levels, rising unemployment and increasing pension concerns means that there is an increased need for many consumers to try and improve their balance sheets

Seems that the recent spike in borrowing suggests consumers are paying off short-term debt. Not sure how this points to a stronger housing market. IMO, it points to fear that too much debt in an enviroment of higher IR could sink the MEW boat.

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Or is could just be that more people are buying houses (and because they have risen in price they have larger mortgages), which would agree with the HM property transactions and the approvals. But that would be to obvious wouldn't it?

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  • 335 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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