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Lenders expect mortgage demand to rise in Q4

Lenders expect mortgage demand to rise in Q4
Samantha Partington
Written By:
Posted:
October 10, 2024
Updated:
October 10, 2024

Demand for house purchase mortgages is expected to increase in Q4, while the margin between mortgage and swap rates is forecast to narrow.

Mortgage default rates, however, are on the rise.

Mortgage lender opinions gauged by the Bank of England’s Credit Conditions Survey reflected no change in demand for house purchase mortgage lending in Q3, which runs until the end of August.

Demand for remortgaging decreased in Q3 but lenders expect it to rise in Q4, ending in November.

Lenders that were surveyed between 27 August and 13 September reported that in Q3, overall spreads on secured lending to households, relative to the bank rate or the appropriate swap rate, widened slightly but were expected to narrow in Q4.

Availability of secured credit to households rose in the three months to the end of August and is expected to remain unchanged over the next three months ending November.

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Mortgage default rates rose in Q3 and are expected to rise again in the final quarter of 2024.

Hot on heels of positive approvals

The expected increase in demand for purchase and remortgage lending in Q4 follows positive news from the bank’s mortgage approvals data, which revealed that purchase approvals for August had reached their highest level since August 2022.

Almost 65,000 loans were given the green light by lenders.

Figures from the bank showed a 4% month-on-month rise in August from 62,500 approvals in July.

Homeowners remortgaging also increased between July and August from 25,200 to 27,200 approvals.

Gross lending rose by £0.3bn to £19.9bn in August.

Meanwhile, Halifax reported that house prices rose 4.7% year-on-year, the strongest rate of annual growth recorded since November 2022, taking the average property value to £293,399.