KPMG UK noted in its latest commentary on the Bank of England’s March 2026 Money and Credit statistical release, KPMG UK has offered a nuanced assessment of the UK’s lending landscape. Karim Haji, Global and UK Head of Financial Services at KPMG, described an economy showing pockets of resilience even as broader pressures mount on households and borrowers.
Haji pointed to a notable rise in mortgage approvals for home purchases and remortgaging activity during the month.
This development stands out because it occurred alongside a marked increase in interest rates in March.
According to the analysis, the upswing could signal underlying strength in the housing market, with buyers and homeowners demonstrating continued appetite for property deals despite higher borrowing costs.
However, Haji cautioned that affordability challenges persist across the board. Elevated rates continue to stretch household budgets, limiting the extent to which this resilience can translate into sustained growth in the sector.
At the same time, consumer borrowing registered a decline, which KPMG interprets as evidence of greater financial prudence among UK households.
Families appear to be reining in discretionary spending and adopting a more measured approach to credit use.
This shift reflects heightened awareness of economic uncertainties and a deliberate effort to safeguard personal finances in an environment of persistent cost-of-living strains. Looking forward, the outlook remains demanding, Haji warned.
While the current energy price cap offers temporary protection for households through to July, external factors are adding fresh layers of difficulty.
The continuing conflict in Iran is exacerbating already high living expenses, with ripple effects expected to weigh on both housing demand and overall borrowing levels in the months ahead.
These global pressures compound domestic challenges, potentially curbing the momentum seen in mortgage approvals and reinforcing caution in consumer credit markets.
KPMG’s assessment underscores the need for vigilance from financial institutions.
Lenders are encouraged to reach out proactively to customers who may be particularly vulnerable to rising costs and repayment strains as the year unfolds.
Early engagement, Haji suggested, could help mitigate risks of financial distress and support borrowers through what is likely to be a testing period.
The Bank of England’s data release provides a monthly snapshot of money supply, lending flows, and credit conditions, serving as a key barometer for monetary policy and economic health.
KPMG’s commentary arrives at a pivotal moment, as policymakers and market participants weigh the balance between encouraging growth and managing inflationary risks.
The mixed signals—resilience in housing approvals juxtaposed with restraint in consumer borrowing—highlight the uneven recovery path facing the UK economy.
KPMG’s insights paint a picture of cautious optimism tempered by structural headwinds.
While certain segments of the credit market show signs of adaptation, the combination of domestic affordability issues and international cost pressures suggests that challenges will linger.
Stakeholders across the financial services industry will be closely monitoring subsequent data releases to gauge whether March’s trends represent a temporary blip or the start of a more enduring pattern. KPMG concluded that as households navigate this complex terrain, the emphasis on proactive support from lenders may prove critical in maintaining stability through the remainder of 2026.