So, it seems the credit crunch has claimed its latest victim: the pinstriped suit. Sales of the ultimate symbol of 1980s power dressing have slumped, according to Savile Row tailors, as their once ostentatious regulars tone down their look with a more muted cloth. “No-one wants to look like a flashy banker any more,” said one tailor this week. “People still want new suits, but they don’t want people to know they have new suits.”

The new-found affection for grey flannel is the latest sign that consumers are becoming more aware of what they are spending and even – dare I say it – learning to live within their means (or at least wanting to give the impression they are).

New figures from the Bank of England struck a similar note. They depicted borrowers rushing to pay back their debts. Last month, mortgage repayments by homeowners outstripped new home loans for the first time since records began (in 1993). The figures also showed a net repayment of personal loans and overdrafts and, although outstanding credit card balances rose, this was by the smallest margin – £92m – since December last year.

Giving more money back to the banks, which have long been short of funds, should be good news. In theory, this means they have more to lend out again, resulting in a more competitive mortgage market and an easing of pressures on the housing market. But the big payback does not work in everyone’s favour.

Banks have been encouraging existing customers with cheap tracker loans to use the money saved on lower interest charges to pay back bigger chunks of their outstanding capital. Hardly surprising when the banks can claw back money they are lending out at, say, 0.5 per cent and lend it out again at, say, 5 per cent to new customers (or even, somewhat meanly, the same customers if they want to move house and need a bigger loan).

Some banks do have a strong appetite to lend. HSBC, which plans to lend £15bn this year – double the amount it provided in 2007 – launched its lowest-ever mortgage rate this week – an eye-catching 1.99 per cent. Woolwich and Cheltenham & Gloucester have also trimmed rates.

As the end of year draws closer, banks that have not yet met their lending targets may start cutting rates more aggressively to attract new business. But borrowers hoping for a wave of cheaper loans may be disappointed. Banks are still being very selective and rates for borrowers without at least 40 per cent in cash or equity are significantly higher. Even if the level of mortgage repayments continues to rise, banks won’t necessarily free up more funds for first-time buyers and those with smaller deposits.

Repaying debt also brings a conundrum for the economy. While faster repayments are crucial to rein in the bloated debt levels of UK households, perversely they could curb a general improvement.

“As long as people choose to reduce their own liabilities, rather than spend on things that count towards growth, then our recovery will be much slower,” points out Sam Hill at Threadneedle.

So, for the greater good of the UK economy, rather than paying back your debt, maybe you should treat yourself on Savile Row, but steer clear of the pinstripe.

sharlene.goff@ft.com