Today the Bank of England released their latest quarterly survey of lenders which showed that Mortgage Lending in the 3rd quarter of the year slowed markedly. In fact, lenders reported the largest fall in the supply of credit since Lehman Brothers collapse in 2008.
It is no real surprise that availability and demand in mortgage finance fell in the past 3 months due to a very quiet summer period and the fall out from the implementation of the Mortgage Market Review as lenders embedded new systems and training. This was further exacerbated by the fact that house prices were pushed to their limits.
On top of this there was much talk about further regulation including the imposition of Loan-To-Income caps and further powers given to the Bank of England. Other political events such as the uncertainty over the Scottish Referendum also played a part.
What is encouraging is that we are now seeing more availability of mortgages as lenders look to hit the lending targets they have fallen behind on by the end of the year.
This is backed up by the Bank’s survey which states that lenders expect both demand for mortgages from consumers and willingness of lenders to supply more loans to bounce back sharply in Quarter 4.
This battle amongst lenders to move past the MMR issues and rebuild their market share has led to a mortgage rate war breaking out as competitive pressures help to cut mortgage rates in every part of the mortgage market. Tracker rates, long and short term fixes, high loan-to-value products and buy to let offerings have all become part of the battleground.
With house prices also on the turn, the last quarter of the year looks like it will be a very competitive period for buyers.