Bank of England Credit Conditions

ended 13. January 2022

At 09:30 this morning the Bank of England is publishing its latest credit conditions report - for the fourth quarter. It basically covers supply and demand for mortgages, unsecured lending and small business loans. Apple-polishing swots can see the Q3 report here. Answer the Qs below that are relevant to you. They're broken down into three sections - mortgages, unsecured loans and small business finance..

Mortgages

  • What was the availability and pricing of mortgages like in Q4 2021 (gazillions of cheap loans I imagine)?
  • How was demand for mortgages in the fourth quarter (rabid I suspect, especially among FTBs)?

Unsecured lending

  • Were people taking on more loans and credit cards in Q4?
  • Was it hard or easy for people to get their hands on loans and plastic in Q4 (compared to Q3)?
  • Is there a sh!tstorm ahead as debt-saddled homes face ever-rising living costs and interest rate rises? 

SME finance

  • How hard was it for the average small business to get finance in Q4?
  • How was the demand from small businesses for loans? Stronger than Q3 or weaker? 
  • Are small businesses taking out loans more to keep them afloat than grow?
  • Are small businesses struggling to cover the loan payments from finance they took out during the pandemic?

As ever, no need for an essay. Just respond to the Qs that are relevant to you. If you're a Premium user, your responses will be edited by an experienced journalist. 

6 responses from the Newspage community

As for the whole of 2020, the mortgage and the housuing market remained strong throghout Q4 as did demand for mortgages. Following on from Rishi Sunak's budget and the anticiapted Bank of England base rate rise, we did see an increase in mortgage rates offered in Q4, that said as long as you could qualify for a mortgage, the deals were still at near record low levels.
The back end of 2021 saw rates move upward; not by much and overall rates are still incredibly low. That upward shift however was enough to get people talking and that’s generated a lot of questions, especially from first-time buyers. However, the reality is a little different, with lenders raising some rates following the base rate change, whilst lowering others. So there is still a huge competitive pressure on lenders to keep rates keen and attract new customers.
In Q4 we saw some of the most competitive mortgage deals in history as lenders battled it out over small margins on the 0.1% base rate. This was combined with an onslaught of buyers desperately trying to secure properties and the mortgage statistics have been astronomical as a result!
We are seeing an increase in small businesses seeking finance, particularly from the hospitality sector. Many SME's have started repaying covid support loans and are looking to boost cashflow. Demand for the government backed Recovery Loan Scheme is also very high, many attracted by the reasonable interest rates and there are no personal guarantees under £250k for directors.
First Time Buyers remain out in force. Unfortunately the supply of housing that is coming to market is what's holding them back. FTBs want to borrow and lenders are competing for their business with low rates and up to £1,000 on completion. Watch this space in 2022.
Ross Boyd
CEO at Dashly.com
"Demand for mortgages and remortgages alike was off the scale in the final quarter of 2021. The prospect of rate rises was increasingly on people's radars and this incentivised many to act. Lenders were competing hard on rates even at higher loan-to-values, and this was another key driver, especially for first-time buyers. The ongoing race for space was another key factor in strong activity levels and we expect this to continue into 2022. In the coming quarter, another Bank of England rate rise is likely and this will doubtless feed through into mortgage rates, but even then rates remain stupendously low, especially at lower loan-to-values. With inflation soaring and the cost of living really starting to bite, lenders are likely to be more cautious and conservative in their lending in the months ahead as they brace for a period of economic turbulence. But demand for property remains strong and is being underpinned by a robust jobs market. Remortgages are likely to see the most activity levels as people set out to lock into the lowest rates possible ahead of any rate rises. January already has seen an exceptional amount of remortgage enquiry levels across the broker community."