MORTGAGE lending fell significantly over the past three months, according to the Bank of England, suggesting the housing market will cool further.
This is the first negative figure since the final three months of 2011 and marks a significant reversal in housing trends. House prices boomed over summer and are expected to grow 17 per cent over 2014, raising fears over affordability.
The results of the Bank’s credit conditions survey show that the percentage of respondents reporting a rise minus those reporting a decrease in mortgage lending was minus 27.4.
However, the figure for the next three months is 19 suggesting mortgage lending will pick up again.
“The survey strengthened the case for thinking that the recovery in mortgage lending is about to get back on track, following its recent dip in response to the introduction of the Mortgage Market Review rules and concerns about another round of bank stress tests,” said economist Paul Hollingsworth of Capital Economics.
“Despite the looming prospect of higher interest rates, lenders also expected demand for secured credit to strengthen soon – a reasonable assumption given the high level of consumer confidence and outlook for a recovery in real incomes over the next year or so.”
House prices are becoming a major concern in the UK.
Research released today on flat sharing site Spareroom.com shows that 18 per cent of renters in the UK believe they will never be able to buy a property. Meanwhile, 25 per cent of London renters say it will be at least 10 years until they are able to get on the property ladder.