“In discussions that took place after the European Union referendum, the major United Kingdom lenders expected the availability of secured credit to be little changed in the near term but the demand for secured credit to fall”, the Bank of England said.
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Lenders are braced for falling demand for mortgage loans following the Brexit vote amid fears over economic uncertainty, the Bank of England said today.
In discussions at the end of June, the major United Kingdom lenders did not expect mortgage rates to change markedly, although some said that “credit conditions could tighten if the macroeconomic outlook deteriorated”.
But the Bank’s survey highlighted the first fall in commercial property lending since 2012 and a “further tightening” of loan conditions ahead, but lenders said wider corporate credit availability was likely to remain steady.
Alongside the review, the Bank also released its quarterly Credit Conditions Survey of banks and building societies.
Lenders also expected households’ demand for mortgages to fall over the next three months, despite a sharp rise in the run-up to the referendum. The survey was conducted before the European Union referendum vote, between May 23 and June 10.
British home-owners borrowing increased in May, the Council of Mortgage Lenders reported Wednesday.
The availability of non-mortgage credit to households, such as personal loans, showed signs of increasing in the three months to mid-June.
The number of loans taken out by movers was up 18% on April but down 5% on May a year ago. Lenders had continued to loosen their credit scoring criteria and the proportion of loans being approved increased, the survey found.
Demand for secured lending for house purchase “increased significantly” in Q2, according to the Bank of England’s Credit Conditions Survey.
The survey was conducted before the European Union referendum, therefore reflecting lenders’ expectations prior to the Leave outcome.
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Howard Archer at IHS Global Insight said: ‘Housing market activity returned to more normal levels after being buoyed in March by buy-to-let and second home sectors rushing to beat April’s Stamp Duty increase for these sectors.
