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, a consultancy, said the consumer borrowing and mortgage data suggested interest rate increase are starting to weigh more heavily on the UK economy.The drag from higher interest rates on bank lending grew further in July, particularly in the housing market. We think this effect will intensify as the Bank of England presses ahead with another 25 basis points interest rate hike, from 5.25% to 5.50%, in September and keeps rates there until the second half of 2024.
And the subdued £0.4bn increase in households’ bank deposits is much smaller than the pre-pandemic average and may suggest that households finances are becoming more stretched.Net borrowing of consumer credit by individuals fell to £1.2bn in July, down from £1.6bn in the previous month, the Bank said.Today’s Bank of England figures have revealed that consumer borrowing fell by a quarter in July.
For many consumers, housing costs will likely continue to top their list of money worries, as rate rises push the number of mortgages with a monthly repayment above £1,000 up by 28% year-on-year according to the latest Equifax figures. These increasing costs combined with sky-high costs for everyday goods will mean wallets remain squeezed for the foreseeable future.
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