- Annual growth in mortgage lending hit its lowest levels for almost 29 years
- £1bn was put on credit cards in November – 9% higher than the same month a year earlier
- £3.7bn of savings went into fixed-term accounts and ISAs in November
- Top ISA deals may disappear amid peak in popularity
Laura Suter, director of personal finance at AJ Bell, comments on the latest Bank of England Money and Credit data:
Mortgages:
“Annual growth in mortgage lending fell to its lowest level for almost 29 years, as the housing market hit sluggish territory in November last year amid high mortgage rates and lack of housing being sold. While the first few days of 2024 have seen mortgage companies start to announce cuts to interest rates, it was a different picture in November, with average rates still rising and homeowners delaying their plans to move – all of which meant a very subdued mortgage market.
“However, there are glimmers of optimism. Firstly, those mortgage rate cuts should bring a little confidence back to the market, meaning some people who had delayed moving might start house hunting again. Secondly, the outlook looks a little rosier, as mortgage approvals for house purchases rose in November – giving an indicator of future borrowing. But despite that slight increase in approvals, they remain far below pre-pandemic average levels.
Debt:
“As is typical in the Christmas run-up, the nation turned to plastic for their spending – putting an extra £500m of debt onto credit cards in November when compared to the previous month. The £1bn the nation put on credit cards in November is also 9% higher than the same month a year earlier – reflecting that more people are turning to debt and that prices have seen chunky increases in the past year.
“The results coming out of retailers and supermarkets show that Brits didn’t hold back at the tills this Christmas, and so we’d expect to see these debt levels increase again in December when those figures are released. While this Christmas boost is welcome for shops and businesses, it means that many will have started 2024 with an unwelcome debt hangover.
Savings:
“People carried on shifting their money from easy-access accounts into fixed-rate savings accounts to capitalise on higher interest rates before they disappear. A total of £3.7bn flowed into fixed-term accounts and ISAs in November. Since then we’ve seen the rates on fixed-rate accounts drop, which will likely cause a rush as people lock in rates before they fall further.
“As tax year end nears we’ll see more people opting for an ISA, as they realise their savings are going to land them with a tax bill. Savers who think they will be hit with tax have to make a tricky call about whether to accept the lower interest rates offered on ISAs and pay no tax, or get a higher interest rate in a non-ISA account but pay the tax bill. As ISAs have become more popular there’s a risk that the most competitive ISA providers get inundated with customer deposits and start to withdraw their top deals – meaning that anyone weighing up this dilemma needs to act fast to get the top rates.”
