Interactive Investor

Mortgage approvals fall further, while borrowing climbs

1st March 2023 10:46

by Myron Jobson from interactive investor

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interactive investor comments on the latest BoE Money & Credit report as pressure on personal finances mounts.

Arrows going in different directions 600

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Mortgage approvals dipped for the fifth consecutive month in January, providing further evidence of weakened demand as higher mortgage rates and the cost-of-living storm bites. While mortgage rates have edged down recently, they are in some cases more than double [what] they were this time last year.

“However, there are signs that housing market activity may be close to a trough. The biggest annual fall in home prices in more than a decade and a seemingly growing wiliness from sellers to accept huge discounts on asking prices to get sales through bodes well for buyer demand.

“Home prices are expected to fall further but are unlikely to fall through the roof as low stock of homes and a strong labour market, with unemployment fallen to its lowest level in generation, could help keep prices elevated.

Borrowing on the up again

“Borrowing was up again in January, with a worrying amount of people relying on the plastic in the face of the soaring cost of groceries, which has risen to yet another record high, as well as higher energy bills. January is typically a bleak month for many after the expense of Christmas and new year – all while inflation and cost of living is at a high. Many of those who have no room in the budget to make further cuts are forced to borrow to tide them over. They will have to keep a watchful eye on their finances to avoid debt spiralling out of control.


“When it comes to savings, we saved an additional £3.5 billion with banks and building societies in January, up from £3.3 billion in December. This suggests that enthusiasm for cash savings has been renewed following a reprieve in savings rates. It could also signify that people are topping up their rainy-day pots in anticipation of a fresh hit to personal finances come April, with energy bills, council tax, broadband, mobile phones, water and sewage bills all set to rise.”

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