Brits seem to be finally getting their finances is order

It seems as if people are trying to get their finances in order because for the first time in fifteen years, people paid off more mortgage debt than they borrowed in May. This has come from the British Bankers Association. This is the first time that repayments have been higher than loans since the London-based trade group began keeping records in 1997.

Mortgage approvals also fell to their lowest in over a year. There is still caution among UK consumers as the Euro zone debt crisis continues and the UK property market struggles to recover. The Treasury and the Bank of England are currently working on a programme that they hope will boost lending and stimulate economic growth.

This programme, ‘funding for lending’, will let lenders swap assets with the Bank of England for money to be lent to homeowners and businesses. Governor of the Bank of England, Mervyn King, said that they need to discuss the plan with the European Commission before details can be published about the programme.

The BBA also said in its report that the number of home loans granted was at its lowest since April 2011. And from a year ago, mortgage approvals were down over three percent. There is still only ‘subdued activity’ in the housing market and making more finance available will only help if the demand is actually there for that finance.

It is lack of confidence in the economy by consumers, strict lending conditions and high unemployment that is undermining the housing market so the road to recovery is not going to be easy and may take a while yet. A survey from the Bank of England in March said that it expected the availability of secured and unsecured loans from lenders to fall in this quarter.