UK banks are anticipating that demand
for mortgages would fall after the Brexit
UK lenders are expecting a drop-off in
demand for mortgages, loans and
business lending in the coming months,
following the vote to leave the EU, a Bank
of England report shows.
The Bank of England’s Credit Conditions
Review said that in discussions after the
referendum, major lenders expected
mortgage availability to be “little
changed” in the near term.
But they also anticipated that demand for
mortgages would fall, it added.
UK lenders did not expect mortgage rates
to change markedly – but some lenders
said credit conditions could tighten if
there was a deterioration in the economic
This could make it tougher for some
people to get a particular mortgage deal.
Today’s review said that as with
mortgage lending, most major UK lenders
expect that demand for non-mortgage
lending, such as that using credit cards
and personal loans, would fall in the near
Alongside the review, the Bank of England
also released its quarterly Credit
Conditions Survey of banks and building
The survey was conducted before the EU
referendum vote, between May 23 and
June 10.
It found demand for mortgage lending for
house purchase had increased
significantly in the second quarter of 2016
– particularly for prime lending.
In the Credit Conditions Survey, lenders
had said they were expecting overall
mortgage demand to increase slightly in
the coming three months.
UK lenders had also reported an
increased willingness to lend to people
with smaller deposits of less than 10% in
the second quarter of 2016.
The availability of non-mortgage credit to
households, such as personal loans,
showed signs of increasing in the three
months to mid-June.
British lenders had continued to loosen
their credit scoring criteria and the
proportion of loans being approved
increased, the survey found.
Meanwhile, the overall availability of
credit to the corporate sector was
reported to be generally unchanged in the
second quarter of 2016, continuing a
trend seen for the last two years.
Lenders also reported that the availability
of credit to the commercial property
sector fell for the first time in four years.
Demand for corporate lending decreased
significantly for large companies in the
three months to mid-June, the survey
Demand for lending from UK small
businesses increased, while demand for
lending from medium-sized firms lifted
The bank’s Credit Conditions Review said
that in discussions conducted after the
referendum, the major UK lenders
expected the availability of credit to the
corporate sector to remain steady,
although a further tightening was
expected for the commercial real estate
The review said that in discussions
following the vote, the major UK lenders
thought there was likely to be a slowdown
in demand for credit in the near term
from both large corporates and SMEs,
partly reflecting some investment
decisions being delayed and mergers and
acquisitions activity slowing.