Karim Haji, Global and UK Head of Financial Services at KPMG, comments on the Bank of England’s Q2 Credit Conditions Survey:
“These latest figures present a complex picture of the current lending landscape. With inflation having finally dropped to the Bank of England’s 2% target, we’ve seen demand for lending increase across the board. The falls in inflation, combined with positive wage growth in the past year, are starting to alleviate cost of living pressures on households and unlock more spending power.
“Yet interest rates remain high, and despite expected cuts are unlikely to return to the levels seen when the hiking cycle began. The cost of borrowing remains a major burden on those who have made use of lending facilities since the 2022 mini-budget or will be thinking of doing so in the coming months. As more and more households’ mortgages come up for renewal, it follows that with significant jumps in monthly repayments the number of defaults could rise. Given the improving economic outlook, any upward momentum in defaults should be short lived, although lenders should remain vigilant.”
