Bank of England report reveals steady mortgage demand amid increased credit supply
The availability of secured and unsecured credit to households increased in the three months to August 2025, with lenders anticipating further growth through November, the Bank of England has reported.
Despite this, demand for mortgages and unsecured lending for house purchases was unchanged in the third quarter and is expected to remain stable in the months ahead.
In the central bank’s latest Credit Conditions Survey, lenders reported that mortgage availability improved in the third quarter and is likely to strengthen further in the final three months of the year. The survey identified a shift in risk appetite as the primary factor influencing the increased availability of secured credit, with a lender response score of 18.8%.
Mortgage access improved across all borrower types, with scores of 28.1% for lending at 75% loan-to-value (LTV) or less, and 27% for high LTV lending. Lenders expect these positive trends to continue in the fourth quarter, with forecast scores of 26% and 25.5% respectively. Additionally, lenders indicated a willingness to provide mortgages to borrowers with less than 10% equity, a stance they expect to maintain in the coming quarter.
“Lenders remain keen to lend and have the funds available to do so,” said Mark Harris (pictured top left), chief executive of mortgage broker SPF Private Clients. “The past few months has seen them easing affordability criteria, increasing the borrowing potential of many mortgage applicants.
“Demand from borrowers remained unchanged during the third quarter, which is a nod to the resilience of the market and the desire of many buyers and sellers to get on with their moves. It is more impressive given that the data covers the summer months when one would normally expect less interest in buying and selling as attention turns to holidays.
“Likewise, remortgaging demand increased and is expected to do so in the fourth quarter of the year as borrowers shop around for competitive mortgage rates to minimise the shock of coming off comparatively cheaper deals.”
Harris added that while borrowers have had to get used to rock-bottom rates being a thing of the past, mortgage rates are fairly steady, enabling borrowers to plan ahead with more confidence.
“However, it is still sensible to plan ahead as much as possible and secure a rate several months before you need it,” he said. “If rates have fallen by the time you come to take the deal out, you should be able to switch to a cheaper product at that time.”
Peter Stimson (pictured top centre), director of mortgages at prime residential lender MPowered Mortgages, however, pointed out that while swap rates have dipped this week following the news that wage inflation has cooled, no one expects the Bank of England to cut its base rate again until next year.
“With little prospect of interest rates going any lower in the coming weeks, the looming prospect of another tax raid has choked off the market’s recovery,” he said.
For Richard Pinch (pictured top right), senior director, risk, at Broadstone, demand for household borrowing remaining unchanged was perhaps a reflection of consumers holding fast amid growing uncertainty around the Chancellor Rachel Reeves’s looming Autumn Budget in November.
“While the market is continuing to show welcomed signs of resilience, the final months of the year could rock household confidence if any tax hikes or other major policy changes are announced in the Budget,” Pinch remarked.
“Lenders should ensure they continue to offer flexible options that suit the long-term financial interests of all their customers and stand ready to protect borrowers and themselves against any headwinds.”
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