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BoE survey hints at lower mortgage demand in Q1

The Bank of England’s quarterly credit conditions survey, in which lenders answer a series of questions regarding business in the last three and next three months, describes falling demand for mortgage loans in the first part of next year.

When asked if demand for secured lending for house purchase changed in Q4 2018, respondents’ answers resulted in a net balance of -24.2 per cent, indicating weak demand. When asked the same question regarding Q1 2019, this figure comes to a slightly more positive -17.5 per cent.

In response to the question: ‘how has demand for secured lending for remortgaging from households changed?’, the net balance for the last three months was recorded at 7.9 per cent. However, when asked the same question for the next three months, this figure fell to -6.9 per cent.

A decade ago, these respective figures read as a more dramatic -75.3 per cent and -51 per cent.

Earlier today, UK Finance figures showed that homeowner remortgages increased by 1.3 per cent on an annual basis in November, although the value remained the same, at £6.8bn.

The BoE survey also shows that lenders plan to target first-time buyers. In response to the question of whether they have become more willing to lend to borrowers with housing equity less than 10 per cent of the value of their home, the net balance of those who answered positively regarding Q4 2018 stood at -1.0 per cent.

When looking towards the next three months, however, this figure moves into positive territory – 5.3 per cent – indicating that lenders may loosen credit terms.

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