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UK banks see demand for mortgages picking up in Q2: BoE survey

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British banks expect demand for mortgages to rise in the next three months, a Bank of England survey showed, in another sign the housing market is regaining speed.

[LONDON] British banks expect demand for mortgages to rise in the next three months, a Bank of England survey showed, in another sign the housing market is regaining speed.

However, lending to companies was expected to remain flat in the April-June period, extending a year-long stretch of stagnant growth in corporate lending.

Stricter controls, and the impact of a run-up in house prices, reduced mortgage lending for much of last year. But mortgage approvals have picked up over the last few months, according to previous BoE data.

Demand for credit card lending edged down in the first three months of this year after seeing the biggest increase during the fourth quarter since records began in early 2007.

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The BoE said lenders expected the availability of mortgages to increase slightly in the second quarter, and demand to increase after falling significantly in the previous two quarters.

Lending to businesses remains soft, with banks reporting no change in the availability of credit to businesses for a fourth successive quarter. They expected it to be unchanged between April and June.

The BoE has long highlighted the lack of credit for companies as a hindrance to Britain's economic recovery.

Despite the flat outlook for corporate lending overall, banks expect demand for credit from small businesses to increase significantly in the second quarter, the survey showed.

The rate of interest charged on mortgages and unsecured lending is expect to narrow significantly in the second quarter.

Data released by the Bank last week showed net lending to businesses in February rose by 440 million pounds, down sharply from January's 1.8 billion pounds.

The BoE survey was conducted between Feb 13 and March 6.

REUTERS

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