Karim Haji, Global and UK Head of Financial Services at KPMG, comments on today’s Q3 Credit Conditions Survey from the Bank of England:
“A cooling in mortgage demand suggests affordability pressures and economic uncertainty continue to temper appetite among prospective buyers, despite a more competitive mortgage market.
“The picture on unsecured borrowing is more finely balanced. Steady demand and rising unsecured defaults suggest that some households are continuing to lean on credit while simultaneously finding it harder to manage existing debts. That divergence is an important indicator of where financial pressure is most acute.
“A dip in mortgage defaults offers some reassurance that most borrowers are continuing to absorb higher housing costs, but rising unsecured defaults underline the financial strain still facing more vulnerable households.
“Looking ahead, Q4 could bring renewed financial pressure on households, with higher energy bills and inflation coinciding with the seasonal increase in spending in the run-up to Christmas. Higher borrowing costs will also add another headwind for consumers. Lenders need to be thinking now about how these pressures could affect households later in the year”.
