Lenders expect demand for purchase mortgages to fall in Q1

The Bank of England has released its Q4 Credit Conditions Survey, with lenders reporting that demand for home-purchase mortgages fell in the three months to the end of November and is expected to ease again through to the end of February. 

This came despite an increase in the availability of mortgage credit over the same period, which lenders expect to rise further into February.

Conversely, demand for remortgaging is expected to increase in Q1. This comes as 1.8 million fixed rate mortgage deals matured in 2025, with borrowers now preparing to refinance.

Recent data from Stonebridge shows that remortgages and product transfers made up nearly two-thirds of activity in October, however, the network stressed that this does not mean the purchase market is subdued, stating that purchase lending has exceeded last year’s levels in almost every month so far this year. 

Simon Gammon, managing partner at Knight Frank Finance, commented: "Lenders were feeling pessimistic over the outlook for the housing market during the weeks leading up to the November Budget, which is unsurprising given all the speculation over tax rises and public spending cuts. House price data for December largely confirmed their view; average values dropped 0.6% during the month, according to Halifax.

"That said, lenders were concerned that the Budget might prompt a bout of macroeconomic volatility and that didn't come to pass. Instead, most of the major lenders cut mortgage rates during the first fortnight of January, which is fuelling momentum. We expect activity to keep picking up as the lenders continue to trim rates during the weeks ahead."