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Mortgage arrangements up but net lending down

In a surprising change of direction for the UK economy July saw an unexpected increase in mortgage arrangements and consumer lending although net lending was down on the month. Total net lending in the UK with just £86 million in July against a figure of £518 million in June highlighting the fact that more and more people in the UK are trying to repay debt ahead of what could be a further difficult economic period.

It is the enormous amount of debt which is being repaid that is causing concern regarding growth for the UK economy as well as unwanted liquidity in the consumer and mortgage markets. It is becoming more and more apparent that consumers are taking a more risk-averse approach to net debt which does not bode well for the immediate prospects of the UK economy.

This new trend in consumer debt is not the fault of the UK banking industry, as shown by increased mortgage and consumer debt arrangements in July, but purely and simply because of concerns about the short-term direction of the UK economy. Until consumers and businesses regain some form of confidence in the UK economy, which could take some time, there will be difficult days ahead.

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