The survey asked lenders to report on any changes they’d perceived in Q4 and to give insight into expected changes in demand for Q1 of this year[2].
Rise in credit available
While demand for house purchase lending fell towards the end of last year and is expected to continue to decrease this quarter, lenders reported that there was actually an increase in secured credit available to consumers. The rise was observed in Q4 and is expected to continue over the first quarter of this year, which is good news for those looking to move this year.
Will more people fix their mortgage?
When it came to remortgaging, lenders reported a rise in demand during Q4 of 2021. This may be down to homeowners wanting to fix their mortgage rate following a move from the MPC to increase the Bank of England rate at the end of last year. Many economists believe that there could be a further two Bank Rate rises during in 2022, with the next one being from 0.25% to 0.5%[3].
Along with energy price cap rises and the soaring rate of inflation, it could be possible that a rise in the demand to remortgage and obtain fixed deals over tracker mortgages could continue into this year.
Levelling out
In December 2021 it was reported that mortgage lending is set to dip in 2022 by £35 billion. UK Finance forecast that gross lending would fall by 11% to £281 billion, down from its peak of £316 billion last year[4].
2021 saw the highest level of house purchase transactions since before the global financial crisis.
Our B Mortgage Services adviser, Mark Walker believes this in part is due to the tax break introduced for homebuyers:
I think we may see a slow-down in Q1 due to a number of factors. 2021 saw the end of the Stamp Duty holiday, which resulted in people who may have been considering moving in 2022 move earlier.
We also saw a large number of people move after the end of the first lockdown having spent more time at home and realising that their current living situation no longer met their needs.”
However, following this surge it’s now believed the housing market will return to more “stable levels”[4].
