Savings fall by half in December

The amount of money saved by Britons in December fell by more than a half from the figure set aside in November, figures have revealed.

A total of £2.3 billion was put away for a rainy day last month, compared to £4.7 billion in November, figures from the British Bankers' Association revealed. The figure was close to the recent half-year average of £2.7 billion.

As potential buyers continued to stay away from the property market new mortgage lending by the major banks fell to an 11-and-a-half-year low.

With repayments and redemptions stripped out, net lending fell to £880 million, the lowest monthly level since June 1999.

Last month there were just 28,726 mortgage deals approved, a level not seen since January 2009, indicating that lending looks set to remain subdued.

Demand for unsecured borrowing remained weak during December, and contracted by 2.2% during the whole of 2010.

Credit card purchases dropped by nearly 6% in the final month of the year, although this is in part likely to reflect weak retail sales due to the bad weather in the run-up to Christmas.

Repayments continued to be higher than new spending, leading to outstanding plastic debt falling by £53 million once interest and charges were factored in.

Lending through loans and overdrafts contracted for the 17th consecutive month, with consumers repaying £322 million more than they borrowed.

David Dooks, BBA director of statistics, said: "The main banks' net lending rose by £20 billion in 2010, in contrast to lending by all other lenders, which decreased by around £12 billion.

"However, mortgage demand was weak throughout the year, with 10% fewer loans approved than in 2009."

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