Mortgage availability tipped to increase in early 2017

Mortgage availability is expected to increase during the first three months of 2017, according to a survey of banks and building societies.

The Bank of England's Credit Conditions Survey found availability for borrowers with deposits of less than 25% is also predicted to edge up in the coming months.

The survey, which asks lenders about current and future trends, is conducted every three months as part of the Bank's role in maintaining financial stability. The most recent survey was carried out between November 21 and December 9.

The Bank also released a Credit Conditions Review which said some major lenders expect that recent increases in swap rates, which lenders use to price their loans, may put an upward pressure on mortgage rates.

Those taking part in the Credit Conditions Survey said they expect profit margins on mortgages to be squeezed in the first three months of 2017.

Lenders also reported that the availability of non-mortgage credit to households increased slightly in the last three months of 2016, but was expected to decrease slightly in the coming three months.

Credit scoring criteria for credit cards were reported to have tightened in the last three months of 2016, and demand for credit card and other non-mortgage lending was reported to have increased.

Lenders also reported that overall demand for corporate lending from small and medium-sized businesses decreased significantly in the last three months of 2016, but remained unchanged for larger firms.

Demand for lending from small businesses is expected to fall back in the first quarter of 2017.

Lenders reported that default rates on loans to small businesses had increased slightly for the first time since the third quarter of 2014. Default rates on loans to medium businesses had also increased.