UK Finance Data Reveals the Impact of Lockdown on the Property Market

Will North, director of core credit at TransUnion in the UK, comments on the latest Household Finance Review from UK Finance:

“Recent figures from UK Finance reveal the full extent the COVID-19 pandemic has had on the housing market, with lockdown and social distancing measures bringing about a sharp decline in mortgage activity in Q2. Home mover numbers fell by 61% in April, compared to the previous year, whilst purchases for first-time buyers and buy-to-let were down 53% and 54% respectively for the same period. The emergency support measures put in place to support consumers, such as mortgage payment holidays, have had the desired effect and kept arrears to a minimum, but as deferrals come to an end there will be further challenges to navigate. It’s essential that finance providers understand their customers’ changing financial situations and can help them through this period.

“Despite this, there are positive indications of a rebound for the property market in Q3, thanks in part to the stamp duty holiday implemented by Chancellor Rishi Sunak. As activity resumed in May, estate agents reportedly saw a dramatic surge in enquiries and it’s likely that many of those who were forced to delay transactions earlier in the year may now continue with their property purchases and take advantage of the incentives on offer and low interest rates.

“Credit card borrowing was also down in Q2, according to UK Finance, falling by 40% when compared to the previous year, and following the 12% year-on-year decrease reported for Q1. Whilst some sectors such as food retailing saw increases in sales, the closures of non-essential retailers, entertainment and hospitality businesses, along with travel restrictions, brought about a sharp drop in spending. Our Financial Hardship Study, which has been tracking the impact of the pandemic, confirms this, with over half of UK households saying they have cut back on discretionary spending since March.

“The same research shows that credit card repayments have consistently been one of the areas of greatest concern for consumers, with our latest figures suggesting over a third (37%) of those financially impacted will be unable to pay their credit card bills. Lenders need to be engaging with customers and setting out appropriate payment plans now in order to minimise the risk of increasing arrears.”