01 June 2023
If you are covering the latest money and credit statistics from the Bank of England, please find below a comment from Karen Noye, mortgage expert at Quilter:
“The latest money and credit data from the Bank of England point to a housing market that is freezing up at a time when property transactions should be flowing nicely. Excluding the pandemic, the amount of mortgage debt borrowed is at its lowest level on record, with £1.4bn of net repayments in April. With mortgage approvals also falling and yesterday’s 25% fall in property transactions, the outlook for the housing market is somewhat bleak as we head into the summer months.
“Despite the more secure economic footing, and the fact a recession seems to have been avoided for now, the path of interest rates remains extremely uncertain. We are expecting the Bank of England to have to raise rates again at is next meeting, and with inflation refusing to come down more quickly it is not out of the realms of possibility that further rises later in the year will be required. Clearly interest rates are having a significant effect on the housing market.
“On the flipside, however, deposits into bank and savings accounts bounced back in April following a £3bn net withdrawal in March. With £3.6bn net flow into these accounts could suggest people are making hay in the new tax year, with interest rates at the best they have been for a long time and cost of living concerns persisting. Clearly, they are still not anywhere near inflation, so savers need to make sure they are assessing their option with their long-term savings as these accounts may not be most appropriate.
“Even with a brighter economic picture, household finances are likely to remain buffeted by the volatility that inflation and higher interest rates bring. It is crucial that people review their borrowing and savings strategies regularly given the cost that fluctuating rates can quickly add. Seeking professional advice to make informed financial decisions is crucial in an environment such as this, and especially given the unique circumstances facing the BoE.”
