Katie Clinton, Head of Financial Services Advisory at KPMG UK, comments on the Bank of England’s Money and Credit statistical release (August):
“A further fall in mortgage approvals in August points to affordability pressures continuing to weigh on housing demand, as the shocks from the Iran conflict push up both inflation and mortgage rates. Meanwhile, the drop in remortgaging suggests refinancing demand softened, despite many borrowers reaching the end of existing fixed term rates.
“The rise in borrowing comes alongside a two-year high in consumer confidence, driven by a better outlook for personal finances and economic conditions. However, with persistently high inflation squeezing disposable incomes, stronger borrowing may also reflect continued affordability challenges pushing people to credit to get by.
“With inflation expected to rise in the coming months and as households head towards the traditionally busy pre-Christmas spending period, pressure on budgets could intensify. It will be particularly important for lenders to engage early in response to signs of financial strain.”
