The Bank of England's Credit Conditions Survey indicates that mortgage demand from home buyers is anticipated to decline over the summer months, even as mortgage availability is expected to rise. Lenders reported that demand for house purchase mortgages increased in the second quarter of 2024 but forecast a decrease in the three months to the end of August.
Remortgaging Demand Also Set to Dip
Similarly, demand for remortgaging rose in the second quarter but is expected to fall in the next few months. The survey, conducted between May 26 and June 12, captures lender perceptions and may not reflect more recent market shifts.
Lender Insights on Consumer Confidence
Nathan Emerson, chief executive of Propertymark, commented: "More stable levels of secured debt, such as mortgages, generally indicate there has been no sudden or harsh shift in consumer confidence." Karim Haji, global and UK head of financial services at KPMG, attributed the second-quarter demand to borrowers "racing to lock in rates, capitalising on cuts to fixed-rate mortgage products by the major lenders." He added that some may have wanted to secure deals ahead of potential inflation spikes.
Outlook for the Third Quarter
Haji noted: "While major lenders have cut mortgage rates and oil prices have eased, the outlook for Q3 remains volatile. Stubborn inflation, lingering energy cost pressures and low consumer confidence linked to cost of living and job security concerns will continue to fuel economic and financial anxiety for many."
Non-Mortgage Credit and Corporate Lending
The survey also revealed that the availability of non-mortgage credit to households is expected to decrease in the coming months. Demand for credit card lending slightly dipped in the second quarter and is predicted to remain unchanged in the third quarter. Lenders reported that interest-free periods on credit cards for balance transfers decreased in Q2 and are expected to stay unchanged, while interest-free periods for purchases decreased but are expected to increase slightly in Q3.
For corporate lending, demand from small and medium-sized enterprises (SMEs) fell in the second quarter, while demand from large businesses was unchanged. In the third quarter, demand is expected to remain flat across all business sizes. Overall credit availability to the corporate sector was unchanged in Q2, though availability for SMEs slightly decreased. It is expected to remain unchanged in Q3.
