Santander UK has successfully passed its toughest stress test since the 2008 financial crisis. The UK banking system is well capitalized and maintainable large liquidity reserves. However, households and firms are under pressure from rising interest rates, as indicated by the Bank of England on Wednesday and compiled by Efe.

That the quality of the entity’s assets is relatively solid, and higher interest rates – by 5% – have limited impact on credit risk, according to a report by the UK issuing bank’s Financial Policy Committee.

However, challenging risk environment, taking into account that some forms of lending, such as to finance a commercial real estate investment or to buy a house to rent, are more risky to incur losses as borrowing costs increase, the entity added.

Last June, the Bank of England raised interest rates by half a point, from 4.5 to 5 percent, the highest level since 2008, to control year-on-year inflation. in the UK, it is at 8.7%. The bank added that the profitability of the UK’s major banks had increased, enabling them to raise capital and support their customers, while smaller lenders were also well capitalized.

Households with high debt are increasing

The proportion of households with high debt has -he added- increased and is expected to continue to increase this year, but is estimated to be still below the historical peak achieved in 2007.

So far the UK economy has been resilient against the risk of rising interest ratesalthough it will take time to see the impact. As the committee highlighted, the outlook for the global economy is quite “uncertain” and interest rates around the world have increased due to central banks’ decision to take action. to control rising inflation.