"A softer start to the year for mortgage activity underlines how fragile household confidence remains. January’s data suggests many borrowers are still choosing caution, prioritising financial resilience over major commitments after a costly end to 2025. While expectations around interest rates may be improving, uncertainty around household budgets continues to delay decision-making for many would-be buyers and remortgages.
“An increase in consumer borrowing likely points to lingering pressure on household finances as many smooth the cost of the festive period into the new year. Rather than signalling renewed confidence, this probably reflects the continued reliance on credit to manage day‑to‑day spending in a still‑challenging cost environment. The reduced energy price cap, announced last week, will hopefully provide some much-needed relief come April.
“As we move further into 2026, lenders and financial services firms face a critical moment to reset their engagement with customers. There is a clear push to help more people invest, make their savings work harder and support wider economic growth, but that ambition is playing out against a more uncertain backdrop. New trade tariffs and recent political pressures, including bi-election results, are adding to market uncertainty at a time when many households are still feeling financially stretched.
“For financial services providers, that means balancing growth ambitions with continued focus on affordability, consumer understanding and fair value – ensuring that support and communication remain front and centre as customers navigate a more complex environment.”
