KPMG has recently shared insightful comments following the Money and Credit data from the update from the Bank of England.
Karim Haji, Global and UK Head of Financial Services at KPMG, shared comments on the recent Money and Credit statistical release.
Karim Haji from KPMG UK shared his perspective in a blog post on the latest Money and Credit statistical release from the Bank of England (for the month of August):
Haji noted that a rise in consumer borrowing in August might potentially signal that many stretched UK based households are still battling the cost of living by turning to credit just to make ends meet.
Haji added that with headline and services inflation coming in below the Bank of England’s August projections / overall expectations, we may now expect an interest rate cut in November.
They added that any drop in rates should actually be welcomed by most U households who are feeling the cost of a “higher for longer” rate environment.
Haji also mentioned that with living cost hikes still outpacing wages for some, households may struggle for the foreseeable future.
Therefore, it’s vital that lenders place careful consideration on new applications for credit and provide “compassionate” approaches to debt and budget management, Haji emphasized.
He further noted that mortgage borrowing figures for August indicate that appetite for longer-term secured borrowing is continuing to rise with August 2024’s figures marking the fourth monthly increase in a row.
But Haji also pointed out that recent increases in mortgage approvals for house purchases may be curtailed should the Bank postpones additonal rate cuts.
Given these developments, it’s clear that the majority of UK households continue to feel the pressure of the cost-of-living crisis. With geopolitical issues escalating in the Middle East and other regions like Ukraine / Russia, it is unlikely that the overall economic situation will significantly improve in the future. Moreover, we might not see a decisive change in momentum until probably the upcoming US elections which tend to have an impact not just on US-related issues but globally as well including in the UK and broader European markets.