KPMG comments on BoE money and credit data - October 2022

Karim Haji, head of financial services at KPMG UK, said:

“The August data again shows rising rates of both consumer credit and mortgage lending, but the context has changed and market conditions have evolved significantly since the end of Summer.

“We are in an inflationary environment, with rising interest rates making debt pricier for those taking it on to either plug gaps in household budgets or move properties. For instance, while we’ve seen robust demand keeping house price growth strong in recent months, renewing a 2-year fixed rate mortgage today would already result in interest rate more than twice as high as two years ago.

“These conditions will likely worsen as the Bank of England delivers further hikes in interest rates over the coming months and we’ve already seen a mass repricing of mortgage products in recent days which will likely dampen demand for debt.

“Against this background, banks continue to tread a fine line. Lenders will need to balance profitability, which could be increased due to a steeper yield curve after years of subdued returns,  with supporting customers through what will still be a very difficult winter.”

ENDS.

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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

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