Mortgage lenders expect demand for borrowing to continue during Q2 after a strong Q1, the latest Bank of England Credit Conditions Survey has revealed.
However, they do anticipate an increase in defaults over the coming months as the cost of living crisis bites. Although outright losses on mortgage lending are expected to remain stable.
Lenders also anticipate a continuation of the strong remortgage demand which has been seen in Q1 as people try and lock in competitive rates.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Strong activity in the housing market is reflected in these figures with demand for mortgages increasing in the first quarter of the year, a trend expected to continue in the second quarter.
“Remortgaging activity is also on the rise, as borrowers rush to take advantage of cheap mortgage rates before they become more expensive.
“Spreads narrowed as lenders absorbed some of the rising cost of lending. This reflects the fact that lenders have plenty of liquidity and remain keen to lend. Mortgage rates are rising but are still cheap from an historical perspective.
“The availability of finance is one of the main factors driving the property market and with competitive products still very much available, that is unlikely to change for the foreseeable future.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Although usually a useful indicator of direction of travel for the property market, these figures are probably not particularly helpful.
“The increase in house purchase demand reflects buying intentions from before the rising cost of living began to take effect. At the sharp end, we have noticed some lenders are already building in a more cautious approach to their decision making, which is inevitably compromising confidence among buyers.
“There is still plenty of demand whereas supply, while increasing, is not keeping up fast enough, which will continue to support prices going forward.”
