Consumers shunning credit this Christmas
Despite stores offering tempting cut-price deals, shoppers are in a cautious mood in the run up to Christmas according to a high street banking report.
Although retail sales were up in October, there was little demand for loans and overdrafts according the British Bankers’ Association (BBA), and while consumers spent a total of £7.2 billion on plastic, they repaid £7.4 billion.
This continued a trend from September which also saw a higher level of repayments than new spending, with £6.9 billion being spent on cards and £7.2 billion being paid back.
There was some indication that people could be turning to their savings to fund Christmas, as the value of personal savings and deposits in high street banks fell by £900 million to £644.1 billion.
However, this figure does include current accounts as well as savings accounts.
According to BBA, 76,042 mortgages were approved in October, a slight increase from the previous month, but a substantial 16 per cent higher than the number approved in October 2010.
Gross mortgage lending totalled £8bn in October, slightly lower than in the previous month, reflecting a general unpredictability in the mortgage market.
A cautious approach to spending was also highlighted in a study by Legal and General in which 31 per cent of those questioned said they planned to reduce their spending on presents this year, while 51 per cent said they planned to spend the same as last year.
The survey revealed that around 1.6 million families could find Christmas unaffordable.
Families in London and the West Midlands are struggling the most, with 60 per cent of families in these regions saying they can’t afford the cost of presents and Christmas celebrations.
Legal and General’s research indicates that almost 80 per cent of households are worse off this year than they were last year.