Bank of England Money & Credit report

ended 30. May 2022

Tomorrow morning at 09:30 the Bank of England is publishing its Money & Credit report for April. Though mortgage approvals will feature, the focus will be on consumer credit (personal loans and credit cards), which is expected to rise again. The report also covers small business finance. You can see the March report here by way of background reading. Handful of questions (just answer the ones that are relevant to you).

  • Are you seeing more people take out personal loans or credit cards to cope with rising bills?
  • In your experience, how was the mortgage market in April? Are buyer numbers starting to drop off, as the #costofliving crisis accelerates? Was the focus on remortgages as rates rise?
  • Are second charges on the increase as people seek to consolidate unsecured debts to make them more manageable?
  • What are the main reasons small businesses are taking out finance for right now (e.g. growth or cashflow/)? 
  • Are you seeing a rise in distressed companies, which are now having to cope with deteriorating economic conditions saddled with BBLs and CBILS?

As ever, no need for War and Peace. 2-3 pars max will do it. If you're a Premium subscriber, your response will be edited.

3 responses from the Newspage community

The mortgage market is extremely busy, as is to be expected at this time of year. For those who can afford to, there's no shortage of eagerness to buy now, rather than hold off. Many are actually bringing purchases forward, in the expectation that mortgages are only going to get more expensive and house prices will, at worst, stay roughly where they are now. And they may well be right. After all, this government always steps in to prop up prices when required with stamp duty holidays and help to buy schemes. The acid test will be what will happen if inflation remains high. The US Fed is expected to raise interest rates to 4% or 5% over the next year or so. What happens to house prices if the Bank of England has to follow suit? The property market could collapse like a Jenga tower.
We have been helping with more second charge mortgages than in the past. This has mainly been for those wanting to borrow for home improvements. Since interest rates have been going up, it has been cheaper for them to borrow the additional money on a second charge and keep their main mortgage on the historic lower rates that they have. The intention would then be to refinance it all onto one mortgage when the fixed rate on their main mortgage ends.
It's never a good idea to cover the cost of living with debt such as credit cards or loans, as this creates a downward spiral of debt reliance which can only create further problems. It's important that people who are struggling financially seek out the right support by speaking with any creditors and asking for 'breathing space' as well as taking advice from Citizens Advice or StepChange. That said, we've seen some borrowers with good credit ratings and strong affordability being turned down for additional borrowing by their existing mortgage lender. These borrowers have been forced to look at higher cost personal finance options such as unsecured loans in order to raise money needed. This indicates a lack of appetite by some mortgage lenders to allow borrowers to raise additional monies, at high loan to value ratios.