Credit availability was reported to have fallen in Q3 both for borrowers with loan to value ratios below 75% and for borrowers with LTV ratios above 75%. Lenders also reported that they had become less willing to lend at LTV ratios above
90% for the first time since the question was introduced in 2013, and some noted that they had introduced policies which restrict lending at high loan to income ratios.
This is partly due to reduced risk appetite, and also came shortly after tighter affordability checks on new borrowers.
The survey said:
"Many lenders noted that operational issues associated with the implementation of the Mortgage Market Review had pushed down on credit availability over the summer."
Consistent with a tightening in credit availability, credit scoring criteria for granting household loan applications were reported to have tightened in Q3 and the proportion of household loan applications being approved fell. However, lenders expected that approval rates would increase in Q4, driven by 'market share objectives'.
Demand for secured lending for house purchase was also reported to have fallen significantly in Q3, breaking the trend of increasing demand seen since the start of 2012. Within overall demand, demand for buy-to-let lending was reported to have increased slightly in Q3. Demand for secured lending for house purchase was expected to increase again in Q4. Demand for secured lending for remortgaging also fell significantly in Q3, but was expected to increase significantly in Q4.
A further significant improvement in secured household loan performance is expected in Q4.
