KPMG UK has indicated that the Bank of England‘s latest Money and Credit statistics for December 2025 reveal a picture of cautious consumer behavior amid persistent economic challenges. Released on January 30, 2026, the data shared by KPMG highlights a slowdown in key borrowing activities, reflecting broader affordability concerns and seasonal pressures.
KPMG also pointed out that mortgage approvals for house purchases dropped to 61,013, a decline from 64,072 in November, marking the lowest level since June 2024.
This represents a net fall of around 3,100 approvals, underscoring hesitancy among potential homebuyers during the holiday period.
In contrast, remortgaging activity showed resilience, with approvals increasing by 1,600 to approximately 38,400.
This uptick suggests that many homeowners prioritized refinancing existing loans to better manage their finances rather than committing to new debt.
The figures capture only switches to different lenders, indicating a strategic focus on cost control amid rising living expenses.
Consumer credit trends further illustrate this prudence.
Net borrowing in consumer credit fell to £1.5 billion in December from £2.1 billion the previous month.
Breaking it down, other forms of consumer credit, such as personal loans, decreased to £0.8 billion from £1.2 billion, while the annual growth rate for overall consumer credit held steady at 8.2%.
These shifts point to households scaling back on non-essential spending, likely influenced by the festive season’s financial demands and ongoing uncertainties.
Broader monetary indicators also softened.
The net flow of sterling money, or M4ex, eased to £13.2 billion from £16.7 billion in November, driven primarily by increases in holdings from households (£4.8 billion), non-intermediate other financial corporations (£4.5 billion), and private non-financial corporations (£3.8 billion).
Similarly, sterling net lending to the private sector (M4Lex) decreased to £12.6 billion from £16.1 billion, with contributions from households (£5.5 billion), private non-financial corporations (£4.7 billion), and non-intermediate other financial corporations (£2.3 billion).
Professionals at KPMG UK emphasized the role of affordability strains in shaping consumer decisions.
Karim Haji, Global and UK Head of Financial Services at KPMG, noted that the dip in mortgage approvals aligns with heightened pressures during a costly time of year.
He highlighted how the increase in remortgaging indicates a preference for handling current obligations over expanding borrowing, especially with elevated costs of living and holiday expenditures.
Haji further observed that reduced consumer borrowing signals ongoing caution, with fragile confidence leading many to postpone significant financial moves amid unclear future expenses.
This sentiment echoes the data’s narrative of delayed decisions in an environment marked by economic ambiguity.
Looking forward, Haji advised that financial institutions should stay vigilant about household budgets. Lenders must strike a balance between meeting viable demand and offering proactive support and adaptability to clients.
This approach becomes crucial as families recover from seasonal spending and confront persistent challenges in a volatile global landscape.
These trends occur against a backdrop of the Bank of England‘s monetary policy, with the base rate standing at 3.75% following a 0.25 percentage point cut in December 2025.
Inflation, at 3.4% on the CPI measure, remains above the 2% target, influencing expectations for future rate adjustments.
Analysts suggest the property market is in a wait-and-see mode, potentially impacted by recent budget uncertainties.
Overall, the December data and KPMG’s analysis paint a portrait of a resilient yet restrained UK economy. As geopolitical tensions and domestic costs persist, stakeholders will watch closely for signs of recovery or further caution in upcoming reports.
This cautious stance could shape lending strategies and economic forecasts into 2026, emphasizing the need for flexible financial support systems.