Connect with us

Hi, what are you looking for?

Editor’s Pick

Fall in mortgage borrowing after mini-budget turmoil

Mortgage borrowing fell to its lowest level in nearly a year last month as the market turmoil after the government’s mini-budget caused a steep rise in borrowing costs, according to new data.

Credit figures from the Bank of England for October showed a 0.25 percentage point rise in the effective interest rate on new property loans, to 3.09 per cent. The total volume of mortgage borrowing fell to the lowest since November last year, at £4 billion, while the number of mortgage approvals dipped to 59,000, from 66,000 the previous month.

The mortgage market was temporarily in turmoil after the mini-budget delivered by Kwasi Kwarteng on September 23, with lenders having to withdraw hundreds of products due to a sharp rise in expectations that interest rates would go up.

Yields on government bonds have now broadly returned to levels in line with the UK’s counterparts and restored relative calm to the mortgage lending market, where interest rates have been steadily rising.

Simon Gammon, partner at Knight Frank Finance, said the turmoil led many buyers to postpone their purchases until the start of the new year.

“The positive news is things have settled down, but the market still feels very finely balanced,” he said. “The mini-budget weighed heavily on sentiment and it’s now clear many buyers have opted to postpone acting at least until the other side of Christmas. We’d expect activity to be subdued until 2023 while borrowers digest what is a ‘new normal’ for interest rates.”

The Bank’s figures showed that households were continuing to borrow on credit cards and other personal loans before the Christmas months and in the midst of a painful cost of living crisis.

Total consumer credit grew by £800 million last month, on top of a £600 million expansion in September. Half of the new borrowing was credit card loans and the other half was borrowing for cars and other personal finance.

The Bank of England has been raising interest rates this year at the fastest pace since the early 1990s, pushing up borrowing costs across the economy as the country heads for a winter recession. The average effective interest rate on a personal loan is now at the highest since 2018, rising 0.48 percentage points to 7.23 per cent.

Karim Haji, UK head of financial services at KPMG, said households were ramping up their savings to “build up a buffer ahead of anticipated tougher times”. Haji added: “People are also redirecting more of their disposable income to work costs, like transport, and essentials, like food, and they appear to be being cautious when it comes to discretionary and big-ticket spending.”

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

News

Egg vendors arrange their products for sale at a store along Blumentritt in Manila, Jan. 26. Filipinos are grappling with soaring prices of food,...

News

ICC prosecutor authorized to reopen Philippines drug war investigation – BusinessWorld Online ...

News

Photo via freepik The past years saw climate change, defined by World Health Organization (WHO) as “the change in climate in time due to...

News

At Christmastime, monster waves and winds battered the 23-year-old Tubbataha Ranger Station. (Inset photo) Metro Pacific Investments Foundation, Inc. committed to provide an additional...

News

www.facebook.com/DOTrPH The Department of Transportation (DoTr) has one of the most illustrious histories of public service, having been founded under the Malolos Constitution on...

News

The ongoing LRT-1 Cavite Extension project, which is expected to reduce travel from Baclaran to Bacoor, Cavite from one hour to 25 minutes Transport...

You May Also Like

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.