Lenders reported that the supply of mortgages remained largely unchanged in the first quarter of 2010, with a slight increase in the availability for credit to those on higher LTVs.

The companies said they expect the situation will remain broadly the same over the coming three months, with another small rise in availability for those on maximum LTV ratios.

While the Credit Conditions Survey expected demand for remortgaging to increase, it actually fell for the fifth consecutive quarter in Q1 2010. The major UK lenders, including Santander, Lloyds, Nationwide, Barclays and Royal Bank of Scotland, do not expect remortgaging demand to pick up, partly due to the lack of incentive for customers to move off low standard variable rate products, which many short-term fixed deals have reverted to.

The lack of high LTV deals was noted as another factor in subduing demand for remortgaging as well as deterring homebuyers. Lenders said that they expect the supply of houses also to remain subdued, despite figures from the Royal Institute of Chartered Surveyors showing a rise in new instructions.

Low SVRs are set to continue for the time being, with the Monetary Policy Committee (MPC) unanimously voting to hold the Base Rate at 0.5% despite inflation escalating more than expected to 3.4% in March. The committee noted that there were risks that inflation could rise further due to increases in oil prices and other commodities.

Sponsored

Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let

Sponsored by Aldermore

David Newnes, managing director of Your Move, said: “The MPC might have been unanimous in their decision to keep interest rates down, but following the jump in inflation, there are fears that we might face an interest rates hike sooner rather than later. It is crucial in the face of all this that the MPC holds its collective nerve and keeps interest rates low until the mortgage market recovery has hit its stride.”