BoE reports ‘significant decline’ in mortgage demand


Secured mortgage borrowing declined significantly in Q3, according to the Bank of England’s Credit Conditions Survey, although the availability of products remained unchanged.

Lenders responding to the survey reported a ‘significant fall in households’ demand for secured credit for house purchase in Q3’, with a decrease of more than 40 per cent on the previous quarter.

Both prime and buy-to-let lending were said to have contributed to the fall, with the decline in BTL demand the highest level seen in the survey since Q2 2007.

Lenders attributed some of the fall in demand to the EU referendum, according to the report, with customers deferring purchases in the weeks before and immediately after the referendum. Speculation on future reductions in bank rate was also cited as a factor that may have contributed to temporarily weaker demand, as borrowers wait to see if mortgage rates fell further.

However, lenders said they expect demand to rebound somewhat in Q4.

Bluestone Mortgages managing director Matt Andrews says the results are “unsurprising”.

“The lack of availability of affordable loans to creditworthy borrowers is a concern – there are still far too many people being locked out of homeownership by the high street lenders,” he says.

“The ‘typical’ borrower is changing, and the market needs to reflect that in its approach to lending criteria. A balance needs to be struck between accelerating the mortgage decision process using technology and intelligent, human underwriting to ensure the customer’s needs are taken into account and that lending decisions are made on a case-by-case basis.”