Mortgage demand for home loans and remortgages fell in the final quarter of last year, but both are expected to pick up in the first three months of 2024, according to lenders.
A balance of -31.6% of banks and other lenders say mortgage demand fell in the fourth quarter, compared to -54.9% in the previous three months, data from the Bank of England’s Credit Conditions Survey – 2023 Q4 shows.
However, a balance of 21.9% says conditions will improve over the next three months, compared to –28.4 who held this view in the third quarter of last year.
But rising default rates remain a concern among lenders in the survey.
A balance of 23.6% say defaults on mortgage debt rose at the end of last year, compared to 43.3% in the third quarter.
Over the coming quarter, a balance of 39.7% say home loan debts will rise, compared to 47.4% of lenders who thought this three months ago.
The survey comes after the base rate was held at a 15-year high of 5.25% in November for the third time in a row as the Bank of England bids to bring inflation back under its 2% target, currently at 4%.
This has allowed lenders to slash mortgage rates as they fight for market share.
However, demand for buy-to-let lending slumped in the final quarter of last year to a balance of -38.9%, from 5.3% in the previous quarter, although 10.6% of lenders expect landlord demand to pick up in the first three months of this year.
Demand for remortgaging was also subdued coming in at a balance of -27.7% in the fourth quarter from -22.8 in the previous three months, although 14.1% of lenders say this will pick up in the first quarter of 2024.
Propertymark chief executive Nathan Emerson says: “Although some of the measures reported for 2023 paint a harsh picture of the housing market many of the initial signs we are currently seeing are pointing towards 2024 being a much healthier year.
“As we start to see an uplift on affordability the Bank of England ideally need to start encouraging more confidence in the housing market by paying close attention to interest rates.
“This will help give banks the confidence to start offering more competitive deals and encourage lending to overall reignite growth in the housing market again.”
