UK lenders expect biggest fall in demand for mortgages since second quarter of 2020

A general view shows the Bank of England and the Royal Exchange Building in London, Britain, December 17, 2020. REUTERS/Hannah McKay

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LONDON, July 14 (Reuters) – British lenders are expecting the biggest drop in demand for mortgages since mid-2020 in the three months to the end of August, a further sign that the housing market is cooling off. to soaring inflation.

The Bank of England’s quarterly credit conditions survey showed the net balance of lenders’ expectations for mortgage demand falling to -41.9. Expectations were last lower in the second quarter of 2021 and the last time actual demand was weaker was in the second quarter of 2020.

Thursday’s BoE survey – which was conducted between May 30 and June 17 – mirrors the sentiment of members of the Royal Institution of Chartered Surveyors, who said property prices rose in June at the pace the slower since March 2021. read more

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Since February 2020, UK house prices have jumped by more than 20%, supported by an increase in working from home, low mortgage rates and an increase in the disposable income of the wealthiest households – trends which have now been reversed .

The BoE survey showed that mortgage lenders are expected to increase the most since the end of 2020 in the additional interest rate margin they charge on top of their own finance costs.

Lenders were also expecting more mortgage defaults – although their past forecasts on this have generally failed to materialize.

For unsecured loans, banks expect demand to be stable as they intend to slightly curb supply by approving fewer loans and credit cards due to the weaker financial situation borrowers.

Corporate loans are expected to remain broadly unchanged.

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Reporting by David Milliken Editing by William Schomberg

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