04 January 2024
If you are covering the latest Bank of England Money and Credit statistics, please see the following comment from Karen Noye, mortgage expert at Quilter:
"New data from the Bank of England shows that the ongoing cost of living crisis has caused some significant shifts in the mortgage market. For example, a year ago in November 2022 we saw £4.4 billion in mortgage lending, now fast forward a year and that has reduced to net zero. The annual growth rate for net mortgage lending reached 0.3% in November, the lowest since the monthly records began in March 1994. This will be largely down to higher interest rates, which have deterred potential buyers and subdued the property market. However, as the year drew to a close, the mortgage and housing market began showing signs of recovery, thanks to a 'price war' among lenders. This competition has brought mortgage rates down below 4%, sparked in part by positive inflation figures and hopes for reduced interest rates in 2024 but also a serious lack of demand in the market.
“However, this demand does seem to be returning as the data shows that there has been a rise of net mortgage approvals for house purchases from 47,900 in October to 50,100 in November. This indicates more people are looking to re-enter the market, which should help to buoy house prices which have been suffering as a result.
“There is less positively on the consumer credit front where there has been a noticeable uptick in borrowing. Net consumer credit borrowing rose to £2.0 billion in November, up from £1.4 billion in October and £0.5bn higher than November 2022. This increase was mainly due to a surge in credit card borrowing, suggesting a growing reliance on this form of credit in the run up to Christmas. The annual growth rate for all consumer credit also increased to 8.6%, the highest since September 2018, driven by a rise in other forms of consumer credit.
“This is serious cause for concern as relying on this kind of credit to help with regular bills can cause someone to enter into a spiral of debt. However, on the brighter side the effective interest rate on overdrafts and credit cards decreased. Anyone worried about their debt should seek help, there are debt charities out there that can help you to put in place budgets to clear unwanted debt.
“Similarly, for those looking to buy a home in the current climate it is worth getting professional financial advice to help look at your finances as a whole and work out what is best for your unique financial circumstances.”
