30 August 2023
If you are covering the Bank of England Money and Credit statistics, please see the following comment from Charlotte Nixon, mortgage expert at Quilter:
“The recent money and credit statistics from the Bank of England illustrate a housing market that shows signs of deceleration amidst what is traditionally an active summer period. The rise in net borrowing of mortgage debt by individuals for the third consecutive month is marginal at best, reflecting a cautionary approach to new mortgage commitments. A decrease in mortgage approvals and only a slight uptick in remortgaging activity in July further underscores this cautious sentiment.
“While the ‘effective’ interest rate on newly drawn mortgages experienced only a modest increase, the broader implications for the housing market are clear. The Bank of England may be poised to adjust rates again in its next meeting. Amidst inflationary pressures, the prospect of additional rate hikes later this year cannot be entirely dismissed. The intricate dance of interest rates undeniably casts its shadow over property transactions, which will feed through to house prices.
“Conversely, the fluctuation in household deposits reveals an interesting story. A considerable drop in deposits into banks and building societies in July, in contrast to the more robust deposit activity in June, indicates some financial reshuffling. Significant net flows into interest-bearing time deposit accounts and ISAs may suggest households are capitalising on preferable rates. Yet, the concurrent outflows from other accounts hint at the need to reallocate resources, perhaps driven by persisting cost-of-living concerns or attractive interest-bearing opportunities elsewhere.
“Households’ modest withdrawal from NS&I accounts for the second consecutive month suggests a re-evaluation of savings strategies. In this ever-evolving financial backdrop, it’s imperative for individuals to routinely reassess both borrowing and saving approaches. The influence of variable rates can rapidly alter one's financial equilibrium. In such times, getting expert advice to make well-informed financial decisions remains paramount, more so given the unique challenges on the Bank of England's horizon.”
