Far from a seasonal upswing, economic uncertainty coupled with the fact borrowers may struggle to find large enough deposits is likely to dampen demand, said lenders, bringing an end to six quarters of increased interest in BTL, according to a Bank of England survey.
Lenders have clearly also been concerned about tighter wholesale funding throughout the second half of the year and remain concerned.
However, in a contradictory BoE Credit Conditions survey, lenders appear torn saying credit availability will improve in Q1 for both consumers and business. However, respondents also say the economic outlook and tighter wholesale funding will have a “negative impact” revealing trepidation from lenders.
The survey showed the biggest fall in lender confidence they could transfer credit risk off balance sheet and tighter conditions for raising capital, since Q1 2009. As a result, lenders plan to tighten credit scoring criteria sharply, with survey results showing their clearest intent for three years. This will lead to less loan approvals, because lenders expect disposable income and so borrower affordability levels to fall, according to the survey.
