Karim Haji, EMA and UK Head of Financial Services at KPMG, comments on April’s Money and Credit Data from The Bank of England:
“The UK needs capital to flow through the economy to drive growth, but the amount coming out of the tap is slowing. Higher lending costs, lower risk thresholds of banks and a weak economic outlook mean that there is downward pressure on supply and demand, which has only been exacerbated by a recent spike in interest rates that triggered the withdrawal of hundreds of mortgage products. Lenders are looking for ways to support their clients through this challenging period, but the economics are unavoidable.
“The picture could further deteriorate as the latest Money and Credit figures won’t have fully baked in the rate rise we saw in late March and, of course, the further increase made by the MPC in early May. Lenders will keep a close eye on the stickiness of inflation as stubborn price data could extend and exacerbate these challenging lending conditions with further tightening of monetary policy down the line.
