29 March 2023
If you are covering the Bank of England’s Money and Credit statistics, please see the following comment from Karen Noye, mortgage expert at Quilter:
"The UK’s housing market looks still on unsteady footing in February, after the Bank of England revealed a notable drop in net mortgage lending to individuals, declining from £2.0 billion to £0.7 billion. This marks the lowest level of net borrowing since April 2016, when it also stood at £0.7 billion. However, this should come as no surprise considering mortgage approvals took a huge tumble in January.
"But some green shoots might be appearing as in February approvals for house purchases showed a rebound, rising to 43,500 in February from 39,600 in January. This marked the first monthly increase since August 2022. However, the effective interest rate on newly drawn mortgages increased by 36 basis points to 4.24% in February, making borrowing more expensive for potential homeowners and will likely still continue to mean approvals are depressed as people adopt a wait and see approach at least in the short term. However, it’s clear that home buyers are cautiously returning back to the market in early 2023 after the huge shocks at the back end of last year made many put their house hunts on ice.
"How this all feeds through to house prices is yet to be seen. At present we have seen a few minor drops in prices but they have remailed relatively resilient as of yet. How prices progress towards the end of the year will depend on how volatile the economy is, the speed at which inflation comes down and how much further the Bank of England go with interest rate increases.
"Consumer credit also positively witnessed a decrease in February, with consumers borrowing £1.4 billion on net, compared to £1.7 billion in January. The borrowing was split between £0.6 billion on credit cards and £0.8 billion through other forms of consumer credit. Any decrease in credit considering the eye watering interest rates many will be suffering is good news but anyone borrowing for day to day needs in this environment may find that they quickly spiral into debt."
