KPMG comments on today’s Bank of England money and credit data

Karim Haji, Global and UK Head of Financial Services at KPMG, comments on today’s Money and Credit data from the Bank of England:

“Mortgage approvals rising for the fifth month in a row shows the housing market recovery is still moving in the right direction. However, positive momentum has been achieved in spite of ongoing affordability challenges and we’re unlikely to see a meaningful and sustained improvement in market conditions until the Bank of England starts to bring interest rates down.

“February’s faster-than expected fall in inflation could offer the relief many homeowners and potential buyers have been waiting for. If the Monetary Policy Committee responds to a brighter economic outlook by cutting interest rates at its next meeting in May, mortgage providers should follow suit, and those holding out for a better fixed-rate deal will spring into action. 

“But, looking further ahead, falling inflation and interest rates will not solve the affordability issues that continue to dog the UK housing market. Insufficient supply will continue to drive demand and push house prices up, making it harder for first time buyers to get on the ladder.

“The cost of living remains high, but a drop in consumer borrowing in February signals falling inflation is starting to feed through to cost of day-to-day expenses. However, default rates remain high and it is critical that lenders remain ready to support customers that are struggling to pay their bills.”

ENDS

For further information please contact:

Gerard Swinley

E: Gerard.swinley@kpmg.co.uk

M: +44 7510 375540

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