Bank of England forecasts stricter lending criteria for mortgages and credit cards

HOUSEHOLDS could find it harder to take out a low-deposit mortgage or a credit card in the months ahead according to a new surve

HOUSEHOLDS could find it harder to take out a low-deposit mortgage or a credit card in the months ahead according to a new survey.

Lenders expect mortgage availability to fall slightly between now and mid-September, reflecting a changing appetite for risk, according to the Bank’s Credit Conditions Survey of banks and building societies.

Those surveyed expect the reduction to affect borrowers with deposits of less than 25 per cent, and in particular those with a deposit of less than 10 per cent.

Meanwhile, for the first time since the question was asked in 2015, lenders said they expect the length of interest-free periods on credit card balance transfers to decrease in the coming three months.

Lenders reported the availability of non-mortgage credit to households had decreased in the previous three months, and was expected fall further in the coming three months. The changing economic outlook was said to be affecting expectations.

Lenders’ credit-scoring criteria for granting credit cards and other non-mortgage loans has tightened in recent months and is expected to tighten further in the third quarter of 2017, the report found.

Default rates on credit card and other non-mortgage lending were reported to have increased significantly in the second quarter, and were expected to increase further on credit card lending in the coming three months.

The news on tighter lending for criteria for mortgages comes as the Northern Ireland housing market has been shown to be the most buoyant in the UK according to the RICS (Royal Institution of Chartered Surveyors) figures.

The RICS and Ulster Bank Residential Market Survey revealed that 41 per cent more surveyors said they saw a rise in prices rather than a fall in June, compared to a seven per cent rate across the UK.

The survey’s indicators for enquiries, prices, and expectations remain firmly in positive territory and indeed are higher in the north than all other UK regions. Newly agreed sales also increased in June, according to local surveyors, having fallen in May.

However, the flow of properties coming onto the Northern Ireland market eased back last month, according to the survey, suggesting that long-standing supply issues remain.

RICS residential property spokesman, Samuel Dickey said the market has performed better than expected in the past six months.

“As we move into the latter half of the year, there continues to be some political uncertainty, and consumers will feel something of a squeeze from rising inflation, however the latest survey suggests that there is still momentum in the local housing market and that surveyors remain positive about the outlook.”

Sean Murphy, managing director, personal banking at Ulster Bank added:

“At Ulster Bank, we continue to see a good flow of mortgage interest, and we expect demand to remain strong in the second half of the year. Buying or moving home remains an attractive option for many people, as, despite rising prices, buying in Northern Ireland remains relatively very affordable. We see evidence that people retain a strong desire to own their own home.”

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