The UK witnessed a significant upturn in the demand for mortgages, signalling a refreshing phase of stability in the property market. This positive shift, documented in the latest data from the Bank of England, breaks a pattern of uncertainty, highlighting a renewed confidence among homebuyers and investors.
The Bank of England’s quarterly survey, which gauges the balance of lenders experiencing a rise in home loan demand against those witnessing a decline, reported an index value of 35.9 for the initial three months of the year. This marks a notable recovery from the -31.6 index recorded in the last quarter of 2023, and it’s only the second time in nearly two years that the demand for mortgages has shown positive growth.
This rebound is further corroborated by a significant leap in the demand expectations for the upcoming three months, with the index reaching its highest point in the last year at 23.2. Additionally, the interest in remortgaging has surged to its peak in over two years, suggesting a broad-based recovery across different segments of the mortgage market.
Market Momentum Builds
According to Simon Gammon, a leading figure at Knight Frank Finance, “Demand for mortgages to buy homes has been rising since the new year and momentum will continue to build into the summer. Many people put off moving while the economic outlook was so uncertain but there’s a real sense now that buyers want to move on.”
The resurgence in mortgage demand brings hope for many who had postponed their moving plans during last year’s economic uncertainties. With a more stable outlook now in sight, potential buyers are increasingly eager to proceed with their housing plans.
Lending Landscape Improves
The Bank of England’s findings also shed light on the improved availability of secured credit for households at the start of 2024. The index for this parameter has shown a healthy increase, suggesting a more accommodating lending environment that supports the ongoing economic recovery. This trend is expected to persist, with predictions of further improvements in credit availability in the coming months.
However, the survey also indicates a slight uptick in mortgage defaults, with anticipations of continued challenges in the near term. Despite this, experts believe that the rise in defaults is a temporary issue, largely attributed to the aftermath of the pandemic and recent mortgage rate adjustments. The overall economic recovery, coupled with a tight labor market and increasing real wages, is expected to mitigate these concerns moving forward.
A Mixed Bag of Property Data
The property market has seen its share of fluctuations, with recent reports from Nationwide and Halifax pointing to an unexpected dip in house prices in March following a January rise in mortgage rates. However, contrasting these findings, the Bank of England reported a significant increase in mortgage approvals in February, reaching a 17-month high. Estate agents also reported a more optimistic outlook on housing demand in March, according to the Royal Institution of Chartered Surveyors.