Lenders reported that demand for secured lending for house purchase and remortgaging declined in Q1, but was expected to rise in Q2
Lenders are gearing up for increased activity over the next quarter, according to the latest Bank of England Credit Report.
Lenders reported that the availability of secured credit to households increased in the three months to end-February (Q1). Lenders expected the availability of secured credit to rise over the next three months to end-May.
Lenders reported that demand for secured lending for house purchase and remortgaging declined in Q1, but was expected to rise in Q2.
Lenders reported that overall spreads on secured lending to households – relative to Bank Rate or the appropriate swap rate – narrowed in Q1 and were expected to narrow further in Q2.
Tomer Aboody, director of property lender MT Finance, said: Lending and borrowing were down in Q1, which is reflective of sentiment in the market. The Budget was looming and along with it, the scheduled end of the stamp duty holiday and the furlough scheme. However, activity in Q2 is expected to pick up again to reflect the various extensions. What this survey does give us is a good indication of what is to come when the government stimulus finally stops or reduces later in the year, as it must at some point.
Demand for borrowing over the past year has been booming. Government assistance accounts for a lot of this artificial confidence and if the figures are any indication, a slowdown in the market will come – this state of affairs cannot continue forever, he said.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said this survey is a good indicator of direction of travel for the property market. However, the historic nature of these latest numbers show activity in pause-mode at the beginning of 2021 when lockdown restrictions were reintroduced and the prospect of meeting the stamp duty holiday deadline for many were receding.
He said: Since then, the stamp duty deadline has been extended and restrictions begun to ease as the vaccination rollout has accelerated. As a result, lending prospects for the next quarter are much rosier and likely to demonstrate a sharp rebound in activity as confirmed by the Bank in their accompanying statement.