Spending patterns among consumers continued to recover in the third quarter but still remain below pre-COVID trends, according to UK Finance’s latest Household Finance Review.

This includes credit card usage, which continued its own recovery towards its pre-pandemic level. UK Finance suggested that while there is some way to go before it reaches this trend, card spending continues to increase, with most sectors of the economy now open for business.

Personal loans, which the banking body suggested may act as a proxy for expenditure on some larger items, also followed a similar trend as credit card spending in Q3.

However, UK Finance highlighted that levels of new borrowing remain below pre-pandemic levels, with some borrowers “not yet sufficiently confident” in either the wider economic outlook or their own position to take on additional debt for to fund bigger-ticket purchases.

Commenting on the findings of its review, UK Finance managing director personal finance, Eric Leenders, said: “While our data shows that the vast majority of customers are managing their borrowing well, lenders continue to provide tailored forbearance and support to borrowers who need help. Anyone experiencing financial difficulty should contact their finance provider as soon as possible to discuss options available.”

The latest Household Finance Review also highlighted the role of the final phase of the stamp duty holiday in Q3, as house purchase lending dropped sharply in the quarter but remained positive, with activity strongest away from the south of England.

With the final phase of the stamp duty exemption benefitting lower-priced property, UK Finance stated that activity “fell away somewhat but also remained positive”.

Barring a full reversal in Q4, the banking body has replicated purchase activity in 2021 is likely to reach the highest level since 2007.

Wayhome CEO, Nigel Purves, commented: “The evidence speaks for itself – home movers disproportionately benefited from the government’s support through the pandemic, while would-be first time buyers were hung out to dry.

“The first rung of the property ladder is getting further and further away – salaries have fallen behind inflation, meaning even those in full-time work face needing to save for more than fifteen years for a deposit. Once they’ve got that deposit, restrictive lending criteria means getting a mortgage is still no mean feat.

“The current landscape is unsustainable; homeownership shouldn’t be an impossible dream – we need radical change in the property market to make it a reality for more people.”

Just Mortgages national operations director, John Phillips, added: “Looking ahead to 2022, demand should remain strong, but there will be less urgency for transactions. With the current imbalance in buyers and sellers, prices look set to continue increasing. However, we may reach a point where some begin to question value for money and put plans on hold.”

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