Continued Rise in Mortgage Approvals as Interest Rates Decline
James O’Donnell, director of research & consulting at TransUnion in the UK, comments on the recent Bank of England Money and Credit statistics.
"The latest Money and Credit report from the Bank of England gave hints at an increasingly positive outlook for 2024. Relatively low mortgage approvals for house purchases picked-up, reaching their highest level since September 2022. Effective interest rates on new mortgages also dipped to 4.73% in March. But it’s likely that this trend will slow in Q2, with major lenders announcing small upward adjustments in their mortgage rate offers. This represents a short-term re-alignment, we still expect rates to fall over the course of the year.
“March also saw a notable increase in net consumer credit borrowing, up £1.6 billion from £1.4 billion in February 2024. This increase was primarily driven by credit card borrowing, rising £0.7 billion in March. Credit card balances grew 12.0% annually, exceeding inflation by a significant margin, lifting credit card balances above pre-COVID levels. Despite this increased consumer indebtedness, we’re seeing positive signs of consumer resilience, with the highest net-inflow of household deposits into banks and building societies since October 2022. This resilience is closely linked to the 6.0% annual wage growth reported in April.i
“This new data may show slight optimism but underscores the need for continued vigilance during shifts in economic patterns. Lenders must remain cautious and adaptable, ensuring responsible borrowing practices and protecting vulnerable consumers. Navigating these dynamics requires a proactive approach grounded in consumer protection, as well as financial stability."
Notes:
i Office for National Statistics Average weekly earnings in Great Britain: April 2024
