Credit card lending slips to 4 year low as calls for rate cuts gather urgency |
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Published
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Sat, 30 Jul 2005 13:05
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LONDON: The Bank of England's June figures made dismal reading as they showed that consumer credit and mortgage lending had slowed down to almost a trickle in that month.
The increase in the lending on credit cards stood at a paltry £335 million. This happens to be the smallest rise in the past four years. The consumer credit for June increased by £1.28 billion, down more than £700m as compared to the concurrent figures in May. Mortgage lending for the month of June totaled to £7.5 billion, as compared to £8 billion in the previous month. Overall around 96,000 mortgages were offered while 100,000 new remortgages met with approval.
Commenting on these figures, Milan Khatri, chief economist at Rics' said, "The figures indicate that housing market activity is holding at moderate levels, though the economic slowdown and a modest deterioration in the labor market this year has introduced an element of caution into the market."
He added that Rics was expecting that a rate cut which is widely tipped to happen in August would provide some relief to the stricken markets. "More timely statistics from chartered surveyor estate agents indicate that buyer purchase enquiries rose in June," Khatri pointed out.
Howard Archer, chief UK economist at consultancy Global Insight, was of the opinion that these figures would only serve to increase the pressure on the Bank of England to bring in immediate rate cuts, "Consumer credit growth was extremely weak in June, which will heighten concern that consumer spending is set to remain relatively subdued in the near term at least, despite June's unexpectedly strong jump in retail sales. This further supports the already compelling case for an August interest rate cut," he observed.
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