interactive investor comments on the latest Bank of England Money & Credit report.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Mortgage approvals fell for the fourth consecutive time in December as the whiplash-inducing speed with which mortgage rates have increased in recent history, coupled with rampant inflation, have intensified the affordability squeeze.
“Winter is typically considered the slowest period for the property market, but the slowdown came early last year as would-be buyers chose to stay on the sidelines following the chaotic weeks in the mortgage marketplace that ensued following the ill-fated mini-budget.
“The growing affordability hurdle remains a pain point for many buyers. All eyes will be on the Bank on England as it prepares to announce it’s latest decision on interest rates, which, if rates go up as expected, is likely to spell even more bad news on those on tracker mortgages.”
“Borrowing was up again in December. Worryingly, the increase in debt was largely a result of an uptick in borrowing through other, and typically larger, forms of personal consumer credit, such as personal loans and car dealership finance, rather than relatively modest spends on credits cards. The £500 million worth of credit card repayments in December, the first net repayment since December 2021, were more than offset by £1 billion of borrowing through other forms of consumer credit.
“This suggests that many Britons will be suffering from a post-Christmas debt hangover and will now have to keep a watchful eye on their finances to avoid debt spiralling out of control.”
“When it comes to savings, although we saved an additional £3.9 billion with banks and building societies in December, this is down from 5.9 billion in November. This suggests that even though there has been a notable reprieve in savings rates, many households are increasing relying on cash they would have otherwise saved to help tide them over amid the cost-of-living crisis.”
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