Demand for some mortgages rose 'significantly' this spring, according to latest figures

Posted 21 July 2015 by Nick Parkhouse

Demand for mortgages in the UK rose “significantly” in the second quarter of 2015 and is set to continue to rise through the summer. That's the conclusion of the Bank of England's credit conditions survey which has revealed that demand for home loans has risen after three successive quarters of decline.

The news comes as figures from another industry body show that buy-to-let lending is continuing to boom.

Demand for mortgages increased in spring of 2015

Lenders have reported that demand for secured credit from households increased slightly during the three months to June 2015, and is expected rise at a similar pace over the next three months. Banks said there had been a significant increase in the demand for lending for prime properties and buy-to-let mortgages during the period.

The Bank of England report said that they expected a slight increase in the number of mortgages to borrowers with deposits of less than 10% of the value of the property they wanted to buy over the next three months.

IHS Global Insight chief UK economist Howard Archer says: “It increasingly looks like the housing market is on the up after being in the doldrums during most of 2014 and the start of 2015. The Bank of England’s credit conditions survey for the second quarter points to broadly healthy economic activity, with increased demand for credit from small businesses, higher demand for mortgages and relatively elevated demand for unsecured consumer credit.”

Richard Woolhouse, chief economist at the BBA, adds: “We’re seeing demand for mortgages increase, as consumers take advantage of some of the extremely competitive mortgage deals that are available from banks at the moment. This – coupled with the increase in demand for personal loans – shows that people are starting to feel more financially secure and ready to commit to making bigger purchases.”

Buy-to-let mortgages buck the lending trend

The Bank of England report comes as figures from the Council of Mortgage Lenders (CML) show that buy-to-let mortgages continue to boom. The CML report that there were 19,100 buy-to-let loans with a collective value of £2.7bn advanced in May. This is a 22% jump compared with a year ago and a 1% increase compared with April.

Loans to first-time buyers increased by 1% on April as 22,700 mortgages with a collective value of £3.4bn were advanced. 26,300 mortgages with a value of £5bn were handed out to home movers, a 2% increase on April.

Paul Smee, director general of the CML, remarks: “Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable. But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction.”

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