You are here: Home - Mortgages - First Time Buyer - News -

Mortgage lending to slow to lowest level since 2011

0
Written by: Anna Sagar
27/10/2022
Mortgage lending in the UK is expected to slow next year to 0.7%, or £11bn, the lowest rate of mortgage growth since 2011.

Mortgage lending is predicted to rise 4% this year following a strong demand in the first-half of the year. This is £63bn in net terms.

However, according to EY Item Club Outlook for Financial Services, this would slow next year as it cited rising mortgage rates and falling real household incomes.

The firm noted that this would rebound in 2024 to 1.4% growth, however.

EY added that impairments on mortgage loans are forecast to rise from 0.02% this year to a nine-year high of 0.05% next year.

This is below the peak of 0.08% in 2009 and is expected to fall to 0.04% in 2024.

The report added that banks will tighten their lending criteria as demand dips along with higher interest rates, riskier economic outlook and volatility in financial markets.

Consumer credit is predicted to grow 7.2% as the cost-of-living crisis and inflationary pressures deepen. Going into 2023, this will slow to 5.1% as inflation lowers and the squeeze on household income eases.

‘Potential homeowners pause purchases’

Anna Anthony, UK financial services managing partner at EY, said: “Geopolitics and the worsening economic environment are having a significant impact on households and businesses. While interest rates are still fairly low by historic standards, they are the highest they’ve been in a decade and are set to rise further.

“This will put further pressure on already-strained finances and will have a knock-on effect on demand for most forms of bank lending next year, as potential homeowners postpone purchases and businesses pause investment.”

She added that affordability is “stretched” and mortgage and business lending are “likely to slow to a rate similar to that seen post-financial crisis”.

Anthony added that a key difference now was tighter regulation and high solvency levels, so banks are well capitalised and more able at supporting customers.

She explained that Brits had a financial cushion of savings built up during the pandemic and businesses had taken out government-guaranteed loan schemes on fixed rate terms at lower interest rates.

“This all means that consumers and businesses are better positioned than they were over a decade ago, and the banks better able to support them,” she concluded.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week