Karim Haji, Global and UK Head of Financial Services at KPMG, comments on today’s Money and Credit statistical release from the Bank of England (for February):
“The fall in borrowing suggests affordability challenges may be starting to soften, buoyed by another interest rate cut and lower than expected inflation.
“While falling inflation will bring some relief to households, there are challenging months ahead, with some utility costs rising by almost 50% from April many households will feel the effects of the Government’s spending cuts outlined in the Spring Statement, such as the reduction in welfare benefits.
“And the geopolitical landscape, particularly the unknown impact of tariffs, continues to cast a shadow of uncertainty over the economic outlook and the impact on people’s finances.
“The surprising dip in mortgage approvals against a backdrop of lower inflation, interest and mortgage rates, and the upcoming Stamp duty increase, suggests that affordability continues to put pressure on household finances. High deposit requirements may also be impacting first-time buyers’ appetites.
“Lenders must offer the right level of support to help those struggling financially both now and in the challenging months ahead.”
