The BoE’s Q3 credit conditions survey revealed that lenders had seen margin on buy-to-let lending remain higher than expected in the third quarter of the year, but they predict this will ease off in Q4.
Instead, it appears prime lending will be where lenders seek to grow margins as high demand for remortgaging continues.
Lenders are also seeing falling availability of funds to lend and expect this to continue until the end of the year.
Risks outweigh market share objectives
A changing appetite for risk and fears over falling house prices in Q3, coupled with growing concerns about the changing economic outlook in the coming months, appear to be outweighing strong market share objectives.
This has been coupled with increasingly tighter credit scoring for secured lending applications which look set to get tighter still.
Although loan-to-value (LTV) ratios increased slightly over the summer, the data suggests willingness to lend to borrowers seeking higher LTVs may have peaked.
Overall, lenders reported that demand for secured lending for house purchase was unchanged in Q3 and was expected to remain unchanged again in Q4.
Demand for buy-to-let purchases also appears to have stabilised and is expected to remain steady for the coming three months.