interactive investor comments on the Bank of England Credit Conditions Survey
13th October 2022 10:54
by Myron Jobson from interactive investor
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Bleak prognosis among lenders suggests financial resilience being tested among many of those relying on loans and plastic.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The Bank of England’s latest quarterly credit conditions survey shows lenders expect defaults on mortgages, credit card and other loans to increase over the coming months as the cost-of-living squeeze becomes more acute. It is a worrying sign of finances being stretched and financial resilience being tested like never before among many of those relying on loans and plastic.
“Interestingly, the availability of loans is expected to dip, which could suggest that lenders are tightening their belts amid the uncertainty in the money market at present.
“The new data supports findings from various house prices indices that demand for home-buying in the UK has tailed off and is set to cool as house prices remain stubbornly high and mortgage rates have risen to levels we haven’t seen since before the financial crisis - pricing many out of the property market. With the ongoing supply-demand mismatch in property propping up house prices, the immediate casualty of higher mortgage rates could be transactions rather than house prices.
“The fact remains that it feel like we are at the end of the golden age for cheap mortgages and with further interest rate rises seemingly around the corner, home ownership is set to become more costly for many of those on the property ladder and those reaching for the first rung.
“With wages expected to further trail behind inflation this year and borrowing costs continue to rise, staying on top of rising prices remains a daily struggle for consumers at the lower end of the income spectrum in particular. The bleak prognosis lays bare, if it was needed, the financial difficulties a great many are set to face in the run up to the festive period.”
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