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UK Financial trends highlighted in recent Bank of England report

UK Financial trends highlighted in recent Bank of England report

The Bank of England's latest Money and Credit release unveils a mixed landscape of borrowing and savings behaviour among UK households and businesses, pointing to varied economic activities in February 2024. This monthly statistical snapshot is crucial for understanding the shifts within the UK's financial climate, serving as a guide for the Bank’s policy decisions.

In February, the mortgage market saw a notable uptick with individuals borrowing £1.5 billion on net, a reversal from the £1.1 billion net repayments recorded in January. Mortgage approvals for house purchases climbed to 60,400 from 56,100 the previous month, signalling an increased appetite for home buying. The remortgaging sector also experienced growth, with net approvals rising to 37,700. A silver lining for new homeowners and those refinancing was the decrease in the 'effective' interest rate on newly drawn mortgages to 4.90%.

Conversely, net consumer credit borrowing dipped to £1.4 billion from £1.8 billion in January, reflecting a cautious approach to personal finance amid fluctuating economic signals. The borrowing landscape for UK non-financial businesses painted a more somber picture, with a net repayment of £3.3 billion in loans, up significantly from £0.2 billion in January. This repayment trend underscores the challenges facing businesses in securing finance.

On a brighter note, household deposits saw a £6.0 billion increase, marking the fifth consecutive month of growth. This suggests a continued trend of saving among UK households, possibly driven by ongoing economic uncertainties.

The broader measure of money supply, M4ex, experienced a £7.2 billion rise, indicating a still robust, albeit volatile, liquidity within the economy. However, the overall net lending to private sector companies and households, M4Lex, showed a significant downturn, emphasising the complex dynamics at play in the UK's financial system.

The report highlights the intricate balance between saving and borrowing in the UK, influenced by interest rates, economic outlook, and individual financial decisions. As the Bank of England continues to monitor these trends, the insights gained will be vital in shaping future monetary policy to foster economic stability and growth.

Read the report here.


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