Bank of England survey signals rise in mortgage availability

Mortgage availability for UK households is set to increase over the three months to the end of May, according to the latest Bank of England Credit Conditions Survey.

Lenders also expect a modest rise in the availability of non-mortgage credit over the same period.

The survey, conducted between 23 February and 13 March, predates recent spikes in borrowing costs linked to the conflict in the Middle East, which have pushed up mortgage rates and household expenses.

Despite these pressures, mortgage demand remained broadly unchanged over the past three months but is expected to strengthen in the coming quarter.

Remortgaging activity, meanwhile, increased in the previous period and is also forecast to continue rising.

Karim Haji, global and UK head of financial services at KPMG, said: “The impact of the prolonged conflict on fuel prices is adding new pressure on household finances, and the full impact of higher costs and mortgage rates is still feeding through.

“Lenders need to strike the right balance between supporting borrowers and managing risk as uncertainty continues.”

Haji added: “Unchanged demand for house purchase lending suggests high borrowing costs and affordability constraints weighed heavy on big-ticket financial decisions, while the rise in remortgaging points to borrowers continuing to refinance as they come off fixed-rate deals earlier.

“At the same time, stable demand for unsecured lending shows households turning to credit to manage their increasing day-to-day spend.

“While some borrowers are still able to access credit, others are beginning to struggle with repayments, pointing to possible early stages of credit deterioration.”

Non-mortgage credit demand, including credit cards, is expected to remain steady, although lenders reported an uptick in default rates over the past three months and anticipate a further slight rise.

The findings come as the housing market shows signs of cooling. The Royal Institution of Chartered Surveyors reported on Thursday that March saw slowing sales and weakening buyer confidence amid rising borrowing costs and broader geopolitical uncertainty.

Economists caution that although lenders are signalling greater availability, households may still face affordability challenges if interest rates remain high.