Expert commentary on BoE Money and Credit announcement

“The aftershocks from last week’s fiscal policy reforms continue to reverberate across the country. A pound in disarray, followed by strong rhetoric from the Bank of England on its monetary response, has caused a wave of lenders to step back from the mortgage market while they reassess their appetite for risk, making it more expensive for people to borrow money.

“Mortgage lenders will of course be back, but with higher interest rates that pour cold water on the hopes of the thousands of house hunters rejoicing at last week’s Stamp Duty reforms. Now also begins a nail biting wait for the 600,000 households with fixed mortgages due to expire this year, and 1.8 million next year.

“None of this will have been captured by today’s figures, which tell a story of rising demand for credit as the cost-of-living crisis continues to ravage household disposable income, but the trendline continues to move in the same direction. As borrowing costs increase, we can expect to see the total value of consumer borrowing continue to increase, although if the Bank of England succeeds in taking some heat out of the market, borrowing levels may fall in real terms.

“The priority for everyone in the credit sector right now should be on affordability. On lending only to those that can afford to repay, and taking care of those that, by no fault of their own, now cannot.”

Paul Heywood, Chief Data & Analytics Officer at Equifax UK