“The sharp rise in borrowing suggests that many households struggled to stretch disposable incomes between Christmas and January pay packets. Coupled with the sharp rise in headline inflation due to rising transport, energy and food prices, as well as annual tax returns, January was a difficult month for many. This was reflected in a drop in consumer confidence, partly driven by concerns about the economic outlook and personal finances moving into 2025.
“As households continue to turn to credit to get by, and with rising inflation and more energy price hikes on the horizon, lenders need to be ready to provide the necessary support to those that haven’t had the best financial start to the year.
“The dip in mortgage approvals suggests that affordability remains stretched for many in a higher rate environment, where house prices are elevated compared to average earnings. High deposit requirements will also be giving potential first-time buyers pause for thought.
“We may see demand grow as we approach the stamp duty increase, with first-time buyers rushing deals through before April.”
