Lenders Predict Expansion in Mortgage and Credit Availability
A recent survey conducted by the Bank of England indicates that lenders expect mortgage availability to households to increase over the three months leading to the end of May. The survey, which gathered responses from banks and building societies, also forecasts a rise in the availability of non-mortgage credit to households in the coming months.
Survey Details and Economic Context
The Bank of England's Credit Conditions Survey was carried out between February 23 and March 13, 2026. It is important to note that this survey does not capture more recent developments in the financial landscape. In recent weeks, mortgage rates and other household costs have surged, partly due to the conflict in the Middle East exerting upward pressure on prices.
Karim Haji, global and UK head of financial services at KPMG, commented on the situation, stating, "The impact of the prolonged conflict on fuel prices is adding new pressure on household finances, and the full impact of higher costs and mortgage rates is still feeding through." He emphasised that lenders must "strike the right balance between supporting borrowers and managing risk as uncertainty continues."
Housing Market Momentum and Demand Trends
The Royal Institution of Chartered Surveyors (Rics) reported on Thursday that the housing market was losing momentum in March. Rising borrowing costs and broader geopolitical uncertainty have significantly weighed on buyer confidence and sales activity. Despite these challenges, the Bank of England survey found that demand for mortgages from home buyers remained unchanged in the previous three months and is expected to increase in the three months ahead.
Additionally, demand for remortgaging increased in the previous three months and is also anticipated to rise in the coming quarter. In contrast, demand for non-mortgage lending, such as credit cards, is expected to remain unchanged over the next three months.
Credit Deterioration and Business Lending Outlook
Lenders reported that default rates for non-mortgage lending increased in the previous three months and are expected to increase slightly in the next three months. Mr Haji elaborated on this trend, noting, "Unchanged demand for house purchase lending suggests high borrowing costs and affordability constraints weighed heavy on big-ticket financial decisions, while the rise in remortgaging points to borrowers continuing to refinance as they come off fixed-rate deals earlier."
He added, "At the same time, stable demand for unsecured lending shows households turning to credit to manage their increasing day-to-day spend. While some borrowers are still able to access credit, others are beginning to struggle with repayments, pointing to possible early stages of credit deterioration."
Regarding business lending, the survey indicates that demand in the next three months is expected to increase slightly for small businesses, decrease slightly for medium-sized businesses, and remain unchanged for large businesses.
Purpose and Limitations of the Survey
This survey is conducted as part of the Bank of England's mission to maintain financial stability. It is crucial to understand that the results are based solely on lenders' own responses and do not necessarily reflect the Bank of England's official views on current credit conditions.
