Karim Haji, Global and UK Head of Financial Services at KPMG, comments on today’s Q4 Credit Conditions survey from the Bank of England:
“These latest figures mark the eighth quarter in a row where lenders have reported a rise in mortgage defaults. This points to the financial strain on households as many are hit by higher mortgage rates in an environment which is still challenged by high cost of living and uncertain future interest rates.
“Against a backdrop of weak UK growth and continued inflationary pressures, we may see defaults continue to rise in the months ahead. Recent shifts in expectations on when and by how much interest rates are likely to fall mean households might expect more financial pain for longer.
“While some other areas of credit remain stable, such as default rates on unsecured lending which fell, the rise in mortgage defaults highlights ongoing economic uncertainty and suggests that many households are still feeling the financial pinch.
“The slight rise in unsecured lending suggests households continued to struggle with cost-of-living challenges in the run up to Christmas, which can be an expensive period for many.
“Lenders need to take a cautious approach to credit applications considering these latest default rates and offer the necessary support to those who have struggled financially over the festive period.”
