Consumer credit borrowing decreased in September

Latest Bank of England Money and Credit data has shown credit borrowing by individuals was £1.2 billion in September, down from £1.4 billion in the previous month.

Commenting on the date Tom Cuppello, Director, Risk at Broadstone said “Consumer confidence has suffered in the run up to the Budget which appears to have hit borrowing through September as households brace for a painful fiscal event driving a small dip in credit volumes.

“Cost concerns are once more rising in prominence, so consumers will want to be careful when selecting which products are most suitable for their individual personal circumstances and ensure they are shopping round to get the best deals.

“Similarly, lenders may face a growing credit risk threat as pressure on repayments begins to build with rising energy costs set to squeeze budgets this Winter.”

Richard Carter, CEO of Lenvi, said “Lenders and borrowers alike are all bracing themselves to find out how Keir’s harsh the ‘light of fiscal reality’ will look for them. Keen homebuyers will be hoping for announcements to ease Stamp Duty and Lifetime ISA penalties to follow the, hopeful, Labour promise ruling out Capital Gains Tax for primary residences. Combined, we’d hope to see these measures stimulate the home-buying market next year, and lenders need to prepare to scale with it.

“We’ve observed lenders increasing mortgage rates in anticipation of the budget, adding to the uncertainty of tomorrow’s announcement, but provided the outcome is positive for home buyers, we could see these rates fall sharply. In the meantime, lenders need to be proactively reassuring vulnerable customers and direct them to support available on websites or third-party organisations.

“The likely increase to national insurance contributions (NIC) will be a blow to businesses, so there is every chance we’ll see more business borrowing taking place as they try to stabilise cash flow and current borrowers struggling to meet repayments. Lenders must be extra vigilant when issuing loans to struggling businesses in this environment.”