BoE Money and Credit stats for June – commentary

“With much of the population still on fixed rates for their utility bills or mortgage payments, not everyone’s personal finances will feel the full brunt of rising headline inflation straight away, but even with that lag, most people are now experiencing the inflationary pinch in one way or another. Many have been forced to cut back on spending in ways we haven’t seen for years, cancelling subscriptions, swapping supermarkets, and diverting less of their income towards paying down debt, even in the face of rising interest rates.

“As prices rise, and disposable income shrinks, consumers are having to find ways to top up the money flowing into their current accounts. Higher income households are increasingly dipping into their savings, reversing a trend seen during the pandemic, while those on lower incomes are turning to the credit industry to help them ride out the storm. Applications for credit are now back to pre-pandemic levels, and as the cost of living crisis continues to unfurl, this demand isn’t going anywhere. Lenders will need to find ways to service this demand responsibly and comprehensively, and should where possible be using data to fight the urge to retrench to the prime end of the market.”

Paul Heywood, Chief Data & Analytics Officer at Equifax