The first three months of this year were a rollercoaster ride for many. Hopes that consumer and business confidence would rebound following last year's Brexit-related uncertainty have been impacted by the economic uncertainty that has come with the global coronavirus pandemic.

UK Finance's latest Household Finance Review sheds some light on the emerging response of households to the crisis. The data in the Review runs to the end of March, so there are some lockdown-related trends that have yet to unfold. Here we provide a snapshot of some of the things we know and consider where the picture will become clearer in the months ahead.

Credit card borrowing falls sharply

We know from official retail sales data and our own experience that lockdown restrictions had a near immediate impact on spending. Payments for holiday bookings, restaurant outings and contactless travel fell sharply in March. This is reflected in the 12 per cent fall in credit card spending and commensurate fall in borrowing on credit cards seen in our Q1 2020 Review. Given the same limitations on spending have been in place for much of Q2, we anticipate seeing more of the same next quarter.

The other side of the weak spending coin is a rise in personal deposit account balances. To some degree this is a continuation of the trend seen through 2019. At the end of Q1 2020, deposits in easy access accounts were nearly two per cent up on the previous quarter.

Muddier mortgage market picture

While the unsecured credit picture shows a clear and immediate response to the crisis, the effect on house purchase and mortgage activity is still unfolding. The mortgage market was pretty subdued in 2019, recording a slight fall in volumes over the year. The Q1 headline is more of the same, with the number of mortgages for house purchase broadly unchanged from a year ago. Our data does show growth in buy-to-let purchases, but this was largely offset by declines in first-time buyers. In most - but not all - regions, trends in homemovers and first-time buyers were somewhat weaker in March, compared with January and February.

We also saw the Bank of England act in March to support the economy by reducing interest rates to the historic low of 0.1 per cent, in addition to an expansion of its asset purchase programme. The impact of this on mortgage borrowers will be limited. Around seven in ten mortgage customers have locked into two or five-year fixed rate deals, taking advantage of competitive rates in the market, with the remainder having lower outstanding balances on their mortgages. Despite the cuts to the Bank Rate we expect preferences for fixed-rate deals to remain.

Payment deferrals

While lower interest rates may benefit some, the more substantive support actions from the finance industry through this crisis have been the introduction of payment holidays across a range of products from mortgages to loans and credit cards. Data released to the end of May show that lenders have approved 1.5 million payment deferrals on loans and credit cards and 1.86 million deferrals on mortgages. This will have provided many households with additional flexibility through these challenging times, but it will take some time to understand how various payment deferrals on mortgages as well as other unsecured lending interact. It will also take some time to understand how customers have chosen to use the flexibility of these support measures to manage their personal finances through the current crisis and as the economy transitions to a new normal.