So far, 2015 has been a good year for the household finances. An increasing number of households are receiving pay rises and are enjoying a record low in consumer price inflation, particularly falling food and energy prices.
Furthermore, UK mortgage interest rates hit a record low in June. However, despite this favourable backdrop, it is perhaps somewhat surprising that this has not had a more positive impact on consumer spending.
New car sales and mortgage lending fall
The two biggest discretionary expenditure items are purchasing a new house or car. Both of these big ticket items have failed to record growth during the first half of the year. New car sales have fallen slightly during the first half of the year relative to the same period last year.
The latest figures from the Council of Mortgage Lenders reveal a 9% fall in the number of mortgages for house purchase in Q2 2015 relative to the same period last year. The, 5,700 loans advanced for house purchase during the first six months of the year was 5% lower relative to the corresponding period in 2014.
Number of first-time buyer mortgages declined 15%
The number of first-time buyer mortgages declined 15% year-on-year in the second quarter with over 8% fewer mortgages advanced in the six months to June relative to the same period last year. Meanwhile the home mover market has fared slightly better, albeit activity has been flat during the first six months of the year relative to last year.