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BoE reports ‘significant decline’ in mortgage demand

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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.”

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  • Steven Balmer 14th October 2016 at 1:02 pm

    Why continue to blame Brexit and possible future base rate changes? It is no doubt repercussions from MCD’s reduction of affordability legislation and the new Landlords Tax, coupled with ongoing threats of removing offsets and a likelihood of further cash cowing of landlords. We have a perfect storm of regulatory and political intervention blowing up peoples aspirations as an unforeseen con sequence of over meddling for political gain. Why do these so called experts not say it like it is?

    • Anonymous 19th October 2016 at 1:21 pm

      I quite agree with that and would also point out that the new Stamp Duty hike for a none residential purchase, or purchase of second property, has had a significant impact. I have had plenty of cases over the last 3-4 years, where a client has struggled to sell and decided to rent out their property and buy a new residential property. Given that this now attracts an extra 3% on the stamp duty, it has either put people off, or meant that it no longer works, in some cases. I am sure that the drop off in purchase transaction, at the level suggested in this article, has cost the treasury more in lost stamp duty, that is has gained, with this new rule. As usual, this idea was fine on the face of it, but in reality, it just doesn’t work. It is about time the people at the sharp end were consulted properly, before this type of decision is made.