Housing market slows, savers still stashing cash

Laura Suter
29 September 2021

Laura Suter, head of personal finance at AJ Bell, comments on the latest figures from the Bank of England on savings and mortgages:

“Some of the heat is coming out of the housing market, after a pandemic-fuelled drive for space and the Government stamp duty cut put the rockets under the market. While August saw a small rebound in borrowing compared to July, the £5.3bn borrowed is 20% lower than the average for the past 12-months.

“Approvals for house purchases, which are the figures that give us an insight into what future months look like, show a slight reduction on the past year but are still above pre-pandemic levels. Rather than seeing a total drop off a cliff, as many have feared, it’s likely that the housing market will just gradually slow down as the final end of the stamp duty holiday arrives and many of the people who wanted to move in the race for space will have done so.

“The nation’s frugal lockdown saving ways have not been dented by being able to go out and spend more, with us all saving £9.1bn in August – almost double the usual savings amount we saw pre-pandemic. However, savers were rewarded with yet another drop in savings rates to yet another historic low.

“With no signs of the Bank of England raising rates and inflation being high, and poised to shift even higher in the coming months, diligent savers are being clobbered from both sides. A mini rates war in some corners of the savings market has improved the best buy rates, meaning there are some options out there for those willing to shop around. And anything is better than leaving it dwindling in your current account earning 0.01% interest – at that rate you’d need £100,000 in savings just to get £10 back each year in interest.

“Borrowing on credit cards, personal loans and car finance rose slightly but is still about a third of what it was in pre-pandemic times. Some of this will be driven by the lack of new car sales, leading to a drop in car finances, but it’s also because as a nation we’re borrowing less on credit since the pandemic reset many people’s finances.”

Laura Suter
Head of Personal Finance

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.

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