Flow of lending ‘still restricted by banks’

Banks are likely to refrain from increasing the flow of lending to consumers in the near term, an expert has suggested.

Recent figures from the Bank of England showed that the increase in lending seen in March was less than that of February, despite steps taken to make more money available to financial institutions.

And David Kuo, head of personal finance at fool.co.uk, noted that it could take time for an improvement to be seen, which may affect those planning to consolidate debt.

“I don’t think we’re going to be seeing any kind of credit-led recovery until the banks are absolutely certain that they have enough cash for themselves,” he remarked.

Mr Kuo added that consumers with debt management problems could continue to suffer until banks “slowly” release the money into the market.

The Bank of England statistics showed the amount lent to individuals in March increased by £0.9 billion – less than the average of the previous six months.

By Andy Mackay