The availability of mortgages dropped in the three months to the end of May, while demand for both remortgages and purchase loans also fell, according to the Bank of England’s credit conditions survey.
A net balance of 72 per cent of lenders reported lower availability of mortgages over the period which included the housing market lockdown, while a net balance of 22 per cent felt that availability would be lower over the coming three months.
Meanwhile, a net balance of 79 per cent of lenders reported that demand for house purchase loans had fallen over the three-month window, during which property owners were urged not to move home due to social distancing rules.
Demand for remortgaging also decreased according to a net balance of 55 per cent of lenders.
A balance of 22 per cent of lenders expected the availability of mortgages to decrease further over the next three months to the end of August, but a balance of 21 per cent expect demand to increase.
SPF Private Clients chief executive Mark Harris says: “With the UK housing market in lockdown for a good part of the period covered by the survey, it is no surprise that the demand for lending for new purchases and remortgaging decreased, and like the Bank of England we would expect this to pick up in the next quarter.
“Overall spreads also widened and with lenders re-pricing upwards this past week while swap rates continue to fall, this trend looks set to continue.
“The stamp duty holiday is a welcome boost to the market and should hopefully boost activity in the next few weeks and months.
“Transactions are far more important than house prices and if the volume of the former rise, it is good not just for the housing market but the whole economy.
North London estate agent and former Royal Institution of Chartered Surveyors residential chairman Jeremy Leaf says: “This always useful indicator of present trends and future direction of travel for the property market has not disappointed.
“This survey shows a relatively resilient housing sector in spite of significant disruption caused by the pandemic and looks forward quite optimistically to supply and demand in more balance as stamp duty changes and small increases in confidence play a more significant part.”
