The Bank of England (BoE) has published its second quarter credit conditions review. The BoE reports that mortgage approvals for house purchases were higher in April and May than the average in the first quarter as mortgage rates, which are already at historically low levels, fell slightly lower.
Approvals for re-mortgaging also increased in Q2, although mortgage approvals for house purchases and re-mortgaging still remain much lower than in the years prior to the financial crisis. Although lenders expected total gross lending in 2015 to be similar to that in 2014, compared with expectations of an increase initially, the monthly net flow mortgage lending increased slightly in the three months to May. The total net unsecured consumer credit flows also increased in the three months to May.
Mortgage rates and most quoted fixed mortgage rates continued to decrease. With swap rates increasing over this period, spreads over relevant reference rates fell over the quarter. Interest rates on personal loans dropped to the lowest levels, with the quoted rate on a £10,000 loan at its lowest since the start of the series in 1995.
Lenders in the credit conditions survey, published in addition to the review, also reported a slight loosening in credit scoring criteria and, looking ahead, the availability of secured credit was expected to increase slightly in Q3. Demand for secured lending for house purchases increased significantly in Q2, according to respondents to the credit conditions survey, having fallen in the previous three surveys.