According to Bank of England data published on Wednesday, the housing market in Britain experienced a sharp slowdown in November and credit card borrowing increased. These trends highlighted the impact of rising interest rates and the cost-of-living crisis.
The number of mortgages authorized by British lenders fell to 46,075 in November from 57,875 in October, the lowest number since June 2020 when the housing industry slowed to a halt due to the COVID-19 epidemic.
Other indicators of the housing market indicate a dramatic decline is in progress after a quarter increase in house prices during the pandemic.
The mortgage provider Halifax predicted this month that home prices will drop by about 8% this year, while the BoE’s interest rates in December rose from 0.1% to 3.5%, their highest level since 2008.
Many lenders withdrew their mortgage offers in October as a result of the turbulence in the bond market brought on by Liz Truss’s short-lived tax-cut ambitions.
The Bank of England (BoE) said that consumer lending increased by 1.5 billion pounds ($1.8 billion) in net terms in November, with a 1.2 billion increase in credit card borrowing accounting for the greatest such gain since March 2004. The numbers don’t account for inflation.
Economic experts point to rising energy costs, skyrocketing food prices, and rising borrowing costs as some of the key culprits today, whereas in normal times increased consumer borrowing frequently signals an expanding economy.
“November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. And this will be a constant theme throughout the year ahead,” said Ashley Webb, an economist with consultancy Capital Economics.
According to the majority of economists surveyed by Reuters, 2023 will be a difficult year for the British economy, with the consensus predicting a 0.9% decline this year.
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