The Bank of England's latest Credit Conditions Survey shows that while lenders reported growing demand for secured lending for house purchase in Q2, they are predicting this to decrease heading into Q3.
Likewise, demand for secured lending for remortgaging increased in Q2, and was expected to decrease in Q3.
Despite rising mortgage rates, lenders reported that default rates on secured loans were unchanged in Q2, and were expected to be unchanged in Q3.
Damien Burke, head of regulatory practice at Broadstone, commented: “The latest Credit Conditions Survey further demonstrates that while consumer confidence and the economic outlook were beginning to improve at the start of the year, the conflict in Iran has dampened that trajectory.
“Lenders reported growing demand in mortgage and remortgage lending but are now expecting to see that decline as we head into the summer months. It demonstrates how concerns around affordability, with increases expected in both the cost of living and the cost of borrowing, can significantly impact market confidence and real lives of consumers."
Karim Haji, global and UK head of financial services at KPMG, said: "Secured lending demand was primarily driven by borrowers racing to lock in rates, capitalising on cuts to fixed rate mortgage products by the major lenders. Some may have also wanted to secure deals ahead of any future inflation spikes.
“While major lenders have cut mortgage rates and oil prices have eased, the outlook for Q3 remains volatile. Stubborn inflation, lingering energy cost pressures and low consumer confidence linked to cost of living and job security concerns will continue to fuel economic and financial anxiety for many."
Nathan Emerson, CEO of Propertymark, added: “More stable levels of secured debt, such as mortgages, generally indicate there has been no sudden or harsh shift in consumer confidence.
“The figures lean towards demonstrating many households have weathered current Middle Eastern geopolitical tensions remarkably robustly, potentially helped by inflation seeing a recent dip and base rates not seeing any increases.
“Recent uncertainty within the global economy has added a degree of reservation regarding financial certainty for many people, and with some UK government policy effectively being paused until there is clarity on the next Prime Minister, the next twelve months may prove essential to closely scrutinise.”
