Savings withdrawals hit record high
29th June 2023 11:06
by Myron Jobson from interactive investor
interactive investor comments on the latest Bank of England Money and Credit report.
Commenting, Myron Jobson, Senior Personal Finance, interactive investor, says: “Britons pulled cash out of their savings accounts to the collective tune of £3.8 billion - £4.6 billion if you strip out deposits into NS&I accounts - as the struggle against rising prices has become too much to bear using monthly income alone for many. This marked the highest level of household withdrawals on record.
“As household budgets buckle under the weight of stubborn inflation, the once untouched savings accounts are now facing a storm. In the face of rising prices across the breadth of household expenditure, from groceries through to mortgage or rent payments, many may find themselves reluctantly tapping into their rainy-day funds, making it hard to weather the financial tempest.
“In the face of a cost-of-living crisis, individuals find themselves at a crossroads, forced to make challenging decisions about their hard-earned savings. The path of withdrawal, although unavoidable for many, is riddled with risks and long-term consequences. With savings acting as the last line of defence, withdrawals leave savers with less shielding to weather the full brunt of unforeseen costs.”
Mortgages
“May proved to be a month of calm before the storm rocked the mortgage market in June. While there was a modest uptick in mortgage approvals and remortgaging last month, they remained below their respective 10-year averages as the housing affordability squeeze continued relegate many to the sidelines.
“Housing sentiment has flipped on its head following a nightmare month of June for those in the market for a home loan. Lenders have pulled and repriced their deals on expectations that interest rates are set to soar beyond revised estimates and stay higher for longer.
“The recent ugly inflation data could also spell more mortgage misery in the near future. The stark reality is while house prices are on the wane, would-be buyers have found themselves in the clutches of a mortgage affordability squeeze not felt since the aftermath of the ill-fated mini-budget back in September last year and the subprime crisis, which erupted back in 2007. For first-time buyers, rising rents don’t help matters, scuppering attempts to build a big enough deposit to buy a house.”
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