Karim Haji, Global and UK Head of Financial Services at KPMG, comments on today’s March Money and Credit statistical release from the Bank of England.
Karim noted:
“A rise in consumer borrowing in March signals that many stretched households continue to battle the cost of living by turning to credit to get by and deal with price hikes in areas of essential spend such as rent and transport.”
As stated in the update from KPMG:
“Given that March saw a slower than expected fall in the rate of inflation, lenders must remain vigilant to how consumers are spending their credit and be ready to support those struggling to pay their bills.”
As mentioned in a blog post, mortgage borrowing figures for March show “that appetite for longer-term secured borrowing is increasing. However, recent increases in mortgage approvals for house purchases could be curtailed if the Bank delays its decision to cut rates.”
Ultimately, this data release “poses some questions for the Monetary Policy Committee.”
In the past month, markets have begun “to revise their expectations for H1 interest rate cuts, with a drop below the current 5.25% now not priced in until late summer.”
They concluded:
“The Bank may very well look to these figures, and stubborn inflation, as indication that it must stay the course a little longer – much to the likely displeasure of borrowers.”
Karim Haji, Global and UK Head of Financial Services at KPMG, also commented on the latest Q1 Credit Conditions survey from the Bank of England:
“Considering inflation is now falling and is expected to drop to below the Bank of England’s 2% target in the months ahead, rising demand for credit card lending in Q1 suggests a more positive economic outlook hasn’t fed through to household finances yet. Defaults across all unsecured lending increasing over the same three-month period indicates many people are still struggling to meet their day-to-day costs. Lenders will need to be vigilant and continue to offer support for borrowers in the interim.”
