Karim Haji, EMA and UK Head of Financial Services at KPMG, comments on today’s Money and Credit data from The Bank of England:
“With high consumer spending over the Christmas period came another increase in borrowing. We can expect to see the knock-on impact of that on the economy in the next two months, with a slowdown in consumer spending.
“Households deposited an additional £3.9bn with banks and building societies in December. We are seeing a real increase in consumers switching and adding bank and building society accounts, taking advantage of higher rates and incentives offered to move balances.
“Monthly mortgage transaction volumes dipped slightly in December and have stabilised and normalised to pre-COVID levels. The interest rate paid on new mortgages saw its largest increase since December 2021, when we first saw the Bank of England increase base rate.
“The reality for everyone is that real disposable incomes have dropped, and after a period of two years of high volatility in expenditure, rates and inflation, we can expect to see personal balance sheets going through a period of consolidation over the next two quarters.”
