Lenders predict slowing market

But availability is expected to fall back in the next three months, in part reflecting some lenders’ expectations that wholesale funding market conditions might tighten in that period.

This is according to the latest Bank of England lending Conditions Survey for Quarter 2 of 2010. Lenders reported that spreads on secured lending to households had narrowed in 2010 Q2 and were expected to narrow further in Q3. Maximum loan to value ratios rose for a third consecutive quarter, but lenders were not anticipating that trend to continue in the next three months.

Demand for secured lending for house purchase was reported to have fallen somewhat in the past three months. Demand for secured lending for remortgaging was reported to have risen for the first time since 2008 Q4, but only a small balance of lenders is anticipating demand to increase further in the next three months.

The default rate and losses given default on secured loans to households were reported to have fallen unexpectedly in the previous quarter. Abstracting from one-off effects, the default rate and losses given default were expected to remain stable in the coming quarter.