Mortgage availability expected by lenders to increase in coming months

Mortgage availability to households is expected to increase over the three months to the end of May, according to a Bank of England survey of lenders.

The availability of non-mortgage credit to households is also predicted to rise in the coming months, the survey of banks and building societies found.

The Bank of England’s Credit Conditions Survey was carried out between February 23 and March 13, and it does not capture more recent developments.

Mortgage rates and other household costs have jumped in recent weeks as the conflict in the Middle East has put an upward pressure on prices.

The Royal Institution of Chartered Surveyors (Rics) said on Thursday the housing market was losing momentum in March as rising borrowing costs and wider geopolitical uncertainty weighed heavily on buyer confidence and sales activity.

Karim Haji, global and UK head of financial services at KPMG, said: “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.

“Lenders need to strike the right balance between supporting borrowers and managing risk as uncertainty continues.”
Demand for remortgaging increased in the previous three months and was also expected to rise in the three months ahead.

Demand for non-mortgage lending, such as on credit cards, was expected to remain unchanged over the next three months.

London IPOs dry up in 2026 as firms fear global volatility and AI bubble
Shell cuts gas production outlook blaming Middle East conflict
Electric car sales hit record high in March while fuel prices surge again
Rediscover your adventurous side on an exotic getaway
Lenders reported that default rates for non-mortgage lending increased in the previous three months, and were expected to increase slightly in the next three months.

Mr Haji said: “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.

“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.”
Demand for business lending in the next three months was expected to increase slightly for small businesses, to decrease slightly for medium-sized businesses, and to be unchanged for big businesses.

The survey is carried out as part of the Bank’s mission to maintain financial stability.

The results are based on lenders’ own responses and do not necessarily reflect the Bank of England’s views on credit conditions.