October News: UK Mortgage lending falls

The availability of mortgages in the UK has dropped to the lowest level since the 2008 recession, the results of a Bank of England survey show.

The BoE’s quarterly credit conditions survey, conducted August 13th to September 8th, attempts to clarify the trends of UK lending, the results of which are published online.

The survey shows mortgage availability shrunk in the third quarter of this year, marking a contraction in UK mortgage lending for the first time in eight years.

Speaking to the Financial Times, the BoE said:

“Many lenders noted that operational issues associated with the implementation of the mortgage market review had pushed down on credit availability over the summer”.

According to Sarah O’Connor, economics correspondent at the FT, the mortgage lenders are showing an increased amount of pessimism toward house prices.

Divided opinion among housing market analysts?

Although the housing market has seen a year of accelerated growth, and the FT says prices are roughly 10 per cent above those of last year, some speculate that the quarterly survey is confirmation of a market cooldown.

If it is a cooldown, it comes after the introduction of affordability checks on borrowers in April, and it follows the BoE’s decision to limit high loan-to-income loans in June.

Drawing from the comments in its survey, The BoE said some lenders “had tightened availability a little in response to recommendations made by the Financial Policy Committee to mitigate risks stemming from the housing market”.

However, other signs point to continued surges in the housing market. A study published in October by Oxford Economics and Rightmove has predicted that by 2019 house prices will have risen as much as 30 per cent.

Some properties are ineligible for a mortgage. No bathroom, no kitchen? No problem. Affirmative Finance provides bridging loans for unmortgageable properties. You can apply for £10,000 to £2 million. Call our Manchester office on 08000 44 84 84 for more information.