The Bank of England’s Credit Conditions survey, which asks lenders to give their opinion about economic factors, highlighted positive sentiment from banks and building societies. Lenders have reported a decline in demand for house purchase mortgages over the previous three quarters.
But despite being optimistic about a rise in demand for mortgages, lenders told the Bank they expected total gross mortgage lending this year to be similar to 2014 indicating lender predictions have cooled since the start of the year.
The availability of secured lending to households was thought to have increased slightly in the three months to mid-June 2015 and was expected to increase slightly over the next three months. Loan-to-value and loan-to-income ratios stayed the same in Q2.
Mortgage rates continue to fall and remain at historically low levels. Overall spreads on secured lending to households, either pegged to the Bank Base Rate or the appropriate swap rate, reportedly narrowed ‘significantly’ in Q2. Lenders predicted this trend would continue into the next three months.
Mark Dyason, director of the mortgage broker Edinburgh Mortgage Advice, said: “Lending is likely to pick up in the second half of 2015 as lenders look to catch up on their targets. Remortgages will drive a lot of this activity as a number of major lenders have large rate cessations. In other words, a lot of people will be finishing their existing rates and moving onto their SVR.”
