Responding to today’s figures from the Bank of England showing that mortgage approvals for house purchase increased further in October, while consumer credit remained weak, Aneesh Varma, Founder and CEO at Aire, comments: “Today’s figures from the Bank of England show a continuation of new normal financial trends we’ve seen emerging throughout 2020. More consumers are taking advantage of the stamp duty holiday and low interest rates to move and improve their homes, while others continue to reduce their short-term credit commitments.
“Levels of consumer borrowing on credit cards have fallen by almost a fifth since before the pandemic. Lenders might reasonably expect these levels to tick up again during November and December as people put Christmas on credit. Continued financial uncertainty, low levels of consumer confidence and further winter Covid-19 restrictions mean borrowing levels will continue to fall again in the new year. Mortgage lenders should also expect to see demand fall as government stimulus is removed.
“The fundamental challenge for lenders is that the impact of Covid-19 is not equal. Some people with spotless credit histories and healthy savings going into the pandemic are now defaulting on their credit commitments through no fault of their own, while others have more disposable income now. Lenders have a duty of care towards the consumer as we emerge from this crisis and must be empowered with new ways of understanding their individual circumstances to better serve them.“