Lending activity on rise as costs fall
Banks reported a slight improvement in credit availability during the third quarter following a fall in their own funding costs, research has indicated.
A small balance of lenders said there had been a rise in the availability of both mortgages and loans for businesses during the three months to early September, according to the Bank of England.
But the improvement in the mortgage market is not expected to continue, as concerns about the economy limit banks' willingness to lend.
Lenders also expect to further tighten their credit scoring criteria for mortgages, continuing the trend seen during the two previous quarters, as they become increasingly cautious about advancing money to the self- employed and assessing people's ability to afford high loan-to-value mortgages.
In line with this tightening, they do not anticipate any further improvement in the number of mortgages available for people borrowing more than 75% of their home's value - potentially ending four consecutive quarters during which it had increased.
Demand for mortgages from people buying a property fell unexpectedly for the third quarter in a row during the period, although there was a slight pick-up in borrowing by buy-to-let investors.
Lenders do not expect mortgage demand to increase during the fourth quarter, as activity in the housing market remains muted and record low interest rates and recent house price falls limit the number of people remortgaging.