Bank of England survey encouraging

Commenting, it said: “The latest Bank of England Credit Conditions Survey suggested that the availability of credit in both the housing and commercial property markets will continue to rise. However, any increases are likely to be modest. What’s more, the survey suggests that, in the face of continuing doubts over the durability of the recovery, lenders’ risk appetite remains very limited.

“Today’s survey offered some encouragement for mortgage borrowers. On a positive note, lenders reported that mortgage default rates fell for the third consecutive quarter in Q1, a far better result than the rise that had been expected in the previous survey. And lenders do not anticipate default rates rising materially in Q2.

“Lenders expect to increase the availability of mortgage credit to households a little further over the coming three months, with a further rise in loan-to-value ratios more likely than a rise in income multiples or a further squeeze in interest margins.

“However, today’s survey also contained some less encouraging aspects. Most notably, lenders remain concerned about the durability of the recovery and a small majority anticipate that house prices will fall back from current levels. On balance, then, today’s survey suggests that mortgage approvals could recover slightly in the near-term, though the rise is unlikely to be dramatic and remains very dependent on the economy not suffering a lurch back into recession.”