INSIGHTS ¦ Household Finance Review – Q3 2023


The “Household Finance Review Q3 2023” review provides a comprehensive analysis of the UK’s household financial behavior during the third quarter of 2023. Amidst fragile consumer confidence and persistent cost pressures, the report delves into spending, borrowing, and saving trends, highlighting the impact of economic conditions on household finances.

Key Points

  1. Consumer confidence showed signs of recovery in Q3 but remained generally low.
  2. Retail sales contracted unexpectedly by Q3’s end, while card spending in travel remained strong.
  3. House purchase lending saw a continued contraction due to affordability barriers.
  4. Mortgage lending was weak across all market segments, particularly at higher LTVs and income multiples.
  5. Savings were further depleted to cover rising monthly bills, without a significant increase in reliance on overdrafts or credit cards.
  6. Arrears rose in Q3, indicating more financial strain on households.
  7. Mortgage refinancing remained robust, driven by competitive retention deals and affordability pressures.
  8. The savings buffer built during the pandemic is reducing but not yet depleted.
  9. Overdraft levels and credit card debt are being carefully watched for signs of increased financial stress.
  10. Economic outlook predictions suggest muted GDP growth, impacting household financial behaviors.
  11. The labor market remains resilient, offering some support to household incomes.
  12. Government measures and the Bank of England’s policies are closely monitored for their effects on household finances.

Key Statistics

  • Consumer confidence and major purchase intentions remained below early 2021 levels.
  • Mortgage applications and completions for first-time buyers and home movers significantly declined year-on-year since December 2022.
  • Personal deposit levels at retail banks were 3% lower at Q3’s end compared to the previous year.
  • Approximately 99480 mortgages were in arrears, representing over 2.5% of their mortgage balance.
  • 1.5 million borrowers were expected to reach the end of their fixed-rate deals in 2023.
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Key Take Aways

  • Household financial resilience is being tested by ongoing economic pressures, with consumer confidence and spending showing signs of strain.
  • The housing market is experiencing significant affordability challenges, impacting borrowing and lending activities.
  • Despite the reduction in savings, the majority of households have not yet resorted to using overdrafts or accruing credit card debt.
  • The financial services industry is actively monitoring and adjusting to these challenges, with a focus on supporting households through refinancing options and managing arrears.
  • Economic and policy developments will continue to play a crucial role in shaping household financial behaviors and well-being in the near future.

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