Mortgage credit availability fell during the third quarter as lenders also reported weaker demand from both homebuyers and remortgage customers, according to the Bank of England.
The Bank’s latest Credit Conditions Survey showed a net balance of -15.5 for the availability of secured lending to households during the three months to the end of August.
Lenders also reported a fall in demand for mortgages for house purchase during the quarter, while demand for remortgaging declined.
However, lenders expect conditions to improve during the three months to the end of November, with mortgage availability forecast to increase slightly and demand from both homebuyers and remortgage customers expected to recover.
CREDIT AVAILABILITY
The net balance for secured credit availability stood at -15.5 in Q3, indicating that lenders collectively reported a reduction in the availability of mortgage credit.
That is expected to reverse in Q4, although only modestly, with lenders returning a positive balance of 5.1 for expected availability.
The Bank’s survey was conducted between 17 August and 4 September, meaning more recent developments in financial markets are not reflected in the results.
MORTGAGE DEMAND
Demand for secured lending for house purchase also decreased during Q3 but lenders expect it to increase slightly during the current quarter.
Remortgage demand followed a similar pattern, falling during Q3 before an expected increase in the three months to the end of November.
The findings suggest lenders anticipate some improvement in mortgage market activity following a weaker summer period.
The Bank’s Credit Conditions Survey gathers responses from banks and building societies and reports results using net percentage balances rather than measuring percentage changes in lending volumes.
A positive balance indicates an increase in credit availability while a negative balance indicates a decrease.
