Karim Haji, Global and UK Head of Financial Services at KPMG, comments on the recent Money and Credit statistical release from the Bank of England ( for the month of August 2025).
Karim Haji of KPMG has noted:
“The downturn in mortgage approvals and remortgaging suggests that affordability pressures and uncertainty around further rate cuts are still suppressing housing market activity. Consumer borrowing remained broadly flat pointing to continued caution in household spending.”
Haji added:
“With the energy price cap set to rise from October and inflation still elevated – particularly for essentials like food and utilities – households face mounting pressure on disposable incomes just as colder months increase energy usage. Lenders should proactively reassess affordability models and step up early engagement strategies with those at risk of payment stress, to help prevent arrears building as winter pressures bite.”
Inflation has actually been elevated globally as well due to a range of factors such as excessive money printing by world governments – which is a trend that has accelerated following the COVID outbreak of 2020. The cost of living crisis has become more severe as consumer purchasing power had dwindled during the past 5 years.
Moreover, taking out mortgages and the actual cost of owning a home has become increasingly out of reach for many people. This lack of affordability has pushed large economies like the UK towards a potential crisis in the coming years. As Gen Z and Millennials approach retirement age in the coming decades, it will become quite challenging for them to maintain their standard of living.
Also as reported recently, consumer confidence in the United Kingdom’s economy declined during the last quarter, reaching the lowest point so far in 2025, according to KPMG’s Consumer Pulse survey.
KPMG’s poll of 3000 UK-based consumers saw the number of people feeling that the economy is worsening increase significantly from around 51% to 62% in the past 3 months and up from 43% since the current year started.
As has been the case throughout this year, the majority of consumers continue to feel financially secure, with no reported change since the past quarter.