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Consumer Credit Growing Again

Consumer credit has grown again in April after a surprise slowdown in the month of March.

Personal loan borrowing and credit card spending by consumers through the main high street banks returned to growth in April.

The latest data released by banking trade body UK Finance has shown that annual growth in personal loan borrowing rose back to 10.8 per cent in April after a 33 per cent decline in March, while credit card spending was up 9.8 per cent annually after a 1.2 per cent drop the previous month.

Personal loan borrowing reached ?1.6 billion in April and credit card spending was up to ?10.2 billion in the UK.

The slowdown in consumer spending and borrowing during March had caused fears that the economy may be slowing too much and was a factor in the Bank of England choosing to keep the base interest rate steady at their latest meeting.

Funds held in savings or current accounts also rose on an annual basis by 1.4 per cent to ?842.3 billion in April, although this was below the previous six-month average of two per cent.

Cash ISAs were shown to hold ?157.1 billion, down by 5 per cent from the previous month.

Eric Leenders, managing director of personal finance at UK Finance, said: ‘Card spending has strengthened following a subdued March. Despite the recent fall in inflation and the squeeze on household incomes starting to show some signs of easing, consumer confidence remains relatively low.’

Approvals for residential mortgage lending was shown to be up by 1.7 per cent to 40,564. Whilst remortgages shot up by 29.6 per cent to 28,390.

Mr Leenders commented: ‘April saw steady growth in mortgage lending and approvals, following a slowdown in activity the previous month,? Eric Leenders, managing director of personal finance at UK Finance, said.

‘This was driven by strong remortgaging levels, as borrowers locked into attractive deals amid expectations of a base rate rise.’

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