31 March 2025
If you are covering the latest money and credit statistics from the Bank of England, please see the following comment from Thomas Lambert, financial planner at Quilter:
“The latest money and credit statistics from the Bank of England show the changes to stamp duty, which come into effect from tomorrow and will land homebuyers with hefty tax bills, have had a significant dampening effect on the property market. Net mortgage borrowing decreased by £0.9 billion to £3.3 billion in February, likely due to people putting home moves on hold as they’d missed the opportunity to get a sale across the line in time. Approvals for house purchases stayed flat, decreasing by just 600 to 65,500 in February.
“While we had seen a slight flurry of activity in the preceding months given people would still have had time to beat the stamp duty changes, many of those who left it too late to get a purchase completed will have put their plans on hold. This will particularly be the case for first time buyers as their hard saved deposit will need topping up to cover the new stamp duty costs which they may not have factored in previously.
“Remortgaging approvals also slowed, dropping by 800 to 32,000 in February. The Bank of England confirmed a hold on interest rates at its latest monetary policy meeting in March, so we could see an uplift in those looking to lock in deals now given the fears that rate cuts could be slow to materialise.
"Consumer credit remained elevated, with net borrowing coming in at £1.4 billion in February, though this is down from £1.7 billion in January. Credit card borrowing also calmed slightly, decreasing to £0.8 billion from £1.1 billion in January, suggesting that some households were relying more heavily on debt to cover spending following the festive period. Nonetheless, credit card borrowing is still being relied upon, and the backdrop of persistently higher interest rates makes this particularly concerning.
"The deposit data paints a picture of households struggling to put quite as much away as in previous months. Bank and building society deposits grew by £4.3 billion in February, less than half of the £8.7 billion deposited by households in January. This continued to be driven by households depositing more into ISAs, likely due to the end of the tax year nearing. Interestingly, £0.7 billion was withdrawn from interest-bearing accounts, possibly due to interest rates starting to look less attractive.
“Today’s figures show that the housing market is still sluggish and could worsen given the changes to stamp duty. Borrowers are already constrained by affordability pressures and in many cases will now have to find several thousand pounds more to settle their stamp duty bills. At the same time, credit borrowing is still elevated and there is less money being put aside for future savings, which suggests households are still struggling despite being through the worst of the cost of living crisis. The road ahead for rate cuts is still hazy, and the coming months will be key in determining the Bank of England’s decisions and subsequently how it will impact households and homebuyers.”
