Fewer seeking loans from HSBC

CONSUMERS' appetite for debt eased for the third month running during August as recent interest rate rises continued to bite.

Banking giant HSBC said the number of enquiries it received about personal loans, mortgages and equity withdrawal in its branches in August were lower than they had been a year earlier for the third consecutive month.

Overall enquiries were down 4.8% on August 2003, following a drop of 4.1% in July and 0.3% in June.

The fall was attributed to a combination of interest rate rises and consumers' concerns over possible future increases in the cost of borrowing.

The bank said the high level of debt people already had was also likely to be a factor in the slowdown.

Falling interest in unsecured loans continued to lead the decline, with enquires 6.2% lower than in the same month of 2003. BUT HSBC said demand for mortgages had also dipped below the level seen in August last year.

Earlier this week the Bank of England said net mortgage lending rose by just £8.65bn on July, the lowest figure for a year and well down on June's total of £9.34bn.

John Butler, UK economist with HSBC's Economics & Investment team, said: 'Although the rate in increase in personal sector debt appears to be easing, it is from a very high level.

'The monetary policy committee will be keen to maintain the slowdown to ensure that consumer activity is compatible with achieving its inflation target. Further interest rate hikes cannot be ruled out.'