01 July 2024
If you are covering the Bank of England Money and Credit statistics, please see the following commentary from Karen Noye, mortgage expert at Quilter:
"The latest Bank of England data released this morning points to a housing market in paralysis. Individuals borrowed a net £1.2 billion in mortgage debt in May, significantly down from £2.2 billion in April. This decrease highlights the cautious approach buyers are taking amidst an unpredictable economic outlook and fluctuating mortgage rates.
"The annual growth rate for net mortgage lending saw a modest rise to 0.3% in May, slightly up from 0.2% in April, marking the first increase in the growth rate since October 2022. Despite this slight growth, the market's overall activity remains tepid, reflecting the uncertainty and reluctance among potential buyers.
"Net mortgage approvals for house purchases, which signal future borrowing trends, dropped to 60,000 in May from 60,800 in April. This decline indicates a growing hesitancy among buyers to commit to new property purchases, which given the economic environment is understandable, but also suggests a cautious outlook may have intensified as the electorate braces for the upcoming election amidst talk of policy changes. Approvals for remortgaging with a different lender saw a minor decrease from 29,900 in April to 29,600 in May, reinforcing the overall sluggishness in the market.
"There is also an increasing trend of homeowners choosing to stick with their current lender when their mortgage deal ends, rather than remortgaging to a new one. Historically, many of these customers would switch to a different lender to secure the best rates. However, with average mortgage rates so much higher than what they were used to many are opting to stay with their current lender through a product transfer to avoid the stringent affordability checks and potential higher costs associated with switching lenders.
"On the consumer credit front, borrowing rebounded in May to £1.5 billion, up from £0.8 billion in April. This increase was driven by a rise in net borrowing through credit cards, which jumped from £0.2 billion in April to £0.6 billion in May, and other forms of consumer credit, which increased from £0.6 billion to £0.9 billion over the same period. It is always a worry to see such increases during a time of economic hardship as it may point to people utilising credit cards when they don’t have the funds elsewhere to pay it down each month."
