De­mand for mort­gages drops as buy­ers put brakes on house sales

The Daily Telegraph - Business - - Business - By Tim Wal­lace

BRI­TAIN’S hous­ing mar­ket has got off to the worst start to a year since 2015 as buy­ers have slammed on the brakes, send­ing de­mand for mort­gages through the floor and stunt­ing prices.

In Fe­bru­ary 63,900 mort­gages were given to home buy­ers, the Bank of Eng­land said, down steeply from 68,700 a year ear­lier.

De­mand for loans fell at the steep­est pace since the aftermath of the Brexit vote, with land­lords and owner-oc­cu­piers cut­ting back.

The Bank’s in­dex of de­mand fell to mi­nus 29.3pc from a pos­i­tive score of 8.3pc in the fi­nal three months of 2017, in­di­cat­ing the pro­por­tion of len­ders that re­ported fall­ing de­mand sharply out­weighed those re­port­ing an in­crease.

Banks said that they were in­creas­ing the avail­abil­ity of loans to bor­row­ers, par­tic­u­larly those with small de­posits.

In­ter­est rates on two-year fixed loans for home­buy­ers with de­posits of 10pc of the prop­erty value have fallen by 12 ba­sis points since Au­gust de­spite the Novem­ber rate rise and the ex­pec­ta­tion of an­other in May, though costs for bor­row­ers with larger de­posits have in­creased.

How­ever, the sur­vey showed that the num­ber of mort­gage ap­pli­ca­tions that were turned down had in­creased to the high­est pro­por­tion since net bal­ance of 18.5pc.

Hansen Lu at Cap­i­tal Eco­nom­ics said that len­ders ex­pect mort­gage de­mand to bounce back in the sec­ond quar­ter, “with a hefty 23pc bal­ance ex­pect­ing a rise in the com­ing quar­ter”, adding that a small bal­ance of len­ders ex­pect the 2012, with

aavail­abil­ity of credit to con­tinue ris­ing in the next quar­ter.

“That ex­pec­ta­tion seems to stem from mar­ket share ob­jec­tives, as a bal­ance of 26pc of len­ders ex­pect com­pet­i­tive forces to push up credit avail­abil­ity in the sec­ond quar­ter – the high­est read­ing seen in five years. Taken to­gether, that seems con­sis­tent with our view that mort­gage lend­ing is un­likely to de­te­ri­o­rate much fur­ther over the re­main­der of the year.”

Mean­while, banks are slash­ing ac­cess to consumer credit at the fastest pace on record, tight­en­ing up cri­te­ria for credit card ap­pli­cants and cut­ting back in­ter­est-free pe­ri­ods. The Bank of Eng­land has warned len­ders that surg­ing consumer bor­row­ing is an in­creas­ing risk to sta­bil­ity. El­iz­a­beth Martins, an HSBC econ­o­mist, said: “Len­ders are get­ting more cau­tious, per­haps as a con­se­quence of the weaker consumer en­vi­ron­ment and slower econ­omy, but per­haps also in re­sponse to the Fi­nan­cial Con­duct Author­ity’s con­cerns about credit card debt.”

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