The findings arrive as mortgage pricing and other household costs have moved higher in recent weeks, amid renewed geopolitical uncertainty linked to conflict in the Middle East. The Royal Institution of Chartered Surveyors said the housing market lost momentum in March, citing pressure from higher borrowing costs and weaker confidence.
On demand, lenders reported no change in appetite for secured borrowing for home purchase in Q1, but expected an increase in Q2. Remortgage demand rose in Q1 and was also forecast to rise again in Q2 as more borrowers refinance when fixed-rate deals end.
Source: Bank of England. Note: Orange diamonds show the expectation over the next three months.
“The latest Credit Conditions Survey suggests a cautiously improving outlook for the mortgage market at the start of the year, with lenders expecting demand to pick up in the coming months, particularly for house purchases and remortgaging,” said Damien Burke, head of regulatory practice at banking and credit advisory consultancy Broadstone. “This reflects a degree of pent-up demand as home buyers awaited lower interest rates and a more certain fiscal landscape.
“However, the timing of the survey is important given it was conducted around the beginning of the conflict in the Middle East. The longer uncertainty around the wider global economic consequences lingers, the bigger the impact on borrower confidence is likely to be. The fall-out from the Ukraine conflict on inflation and mortgage rates remains fresh in the minds of households and even short-term disruption to supply chains can have a long-term impact on the cost of goods. This further amplifies the need for understanding consumer’s individual affordability when assessing for credit products and the benefit of ongoing assessment.