Karim Haji, EMA and UK Head of Financial Services at KPMG, comments on February’s Money and Credit Data from The Bank of England:
“Rising inflation offset the good news that the current downturn is expected to be shorter and shallower than previously thought, and consumer confidence remained low in February as a result.
“Cautious spending continued and the reality now is that more people are starting to fall behind on loan payments. There is sensible advice out there to hold off on borrowing, and while February saw an additional £1.4 billion borrowed in consumer credit, this is down on January. We’ve seen a slight shift this month with a drop in borrowing on credit cards, but a slight uptick on borrowing through other forms of consumer credit.
“It’s a surprise to see mortgage approvals up for the first time since August 2022, but at the same time February also saw the lowest level of net borrowing since 2016. This may be a sign of confidence starting to return as fixed-rate mortgage rates continue to fall since the spike in Autumn 2022. However, rates still remain elevated compared to 12 months ago and variable rates continued to rise in February, putting off some prospective buyers.”
