3 March 2025
If you are covering the latest Money and Credit statistics from the Bank of England, please see the following comment from Rosie Hooper, chartered financial planner at Quilter Cheviot:
"January’s Money and Credit data from the Bank of England points to a property market still in a holding pattern, with no dramatic shifts. Mortgage borrowing rose slightly to £4.2 billion, reflecting a gradual recovery in activity, while approvals for house purchases were virtually flat, down by just 300 to 66,200. This suggests that while demand is not collapsing, it remains constrained by affordability pressures and cautious sentiment. Remortgaging approvals picked up modestly after two months of declines, likely driven by borrowers looking to lock in deals amid uncertainty over when rate cuts might materialise.
"Consumer credit saw a sharper increase, with net borrowing rising to £1.7 billion from £1.1 billion in December. Credit card borrowing surged to £1.1 billion, which is the highest level since November 2023, suggesting that some households are increasingly relying on debt to cover spending. The backdrop of persistently higher interest rates makes this particularly concerning.
"Meanwhile, the deposit data paints a picture of households continuing to prioritise liquidity. Bank and building society deposits grew by £8.4 billion, with a notable shift into ISAs and interest-bearing accounts, reflecting the appeal of higher savings rates although these may start to look less and less attractive in the coming months if rates are cut. The outflow from fixed-term accounts suggests a preference for flexibility, likely in anticipation of potential rate cuts later in the year.
"Overall, today’s figures reinforce the idea that while the housing market is not in freefall, it remains sluggish, with borrowers constrained by affordability pressures. At the same time, the rise in credit card borrowing highlights ongoing cost-of-living strains, and the uptick in savings suggests households are still exercising caution. With the road ahead for rate cuts still not completely clear, the coming months will be key in determining whether borrowing and spending activity start to accelerate more meaningfully."
