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Bank of England Credit Conditions data Q4 22

ended 19. January 2023

Tomorrow (Thursday morning) at 09:30, the Bank of England is publishing its quarterly Credit Conditions report for Q4 of last year. To get a feel for it, you can see the Q3 data >>here<<. Clearly this data will reflect the carnage that ensued after the mini-Budget. Selection of Qs:

  • Did the number of mortgages on the market fall during Q4, and why (we all know why)?
  • What happened to demand for mortgages in Q4, in your experience? And how's demand been this year so far?
  • What happened to mortgage pricing in Q4 (errr, Stig of the Dump could answer that) and how has that changed in 2023 to date?
  • Did you see a rise in defaults in Q4 last year or do you expect the number of people defaulting to rise in 2023? 

4 responses from the Newspage community

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Lee Johnson
Director at Willow Private Finance
During the fourth quarter of 2022, we saw a dramatic decline in mortgage applications, most notably in the first-time buyer and purchase market. The fallout from September's mini-Budget, and fear surrounding the drop in the value of the pound, created an immediate pause in borrower demand. However after the initial sharp uptick in mortgage rates, and as the dust from the mini-Budget settled, we began to see steady reductions in the cost of borrowing, particularly in the closing stages of the year. This did little to persuade the market as the appetite to borrow was still very low. January 2023 is very different, though, with far stronger demand for all forms of residential borrowing. This, combined with an abundance of ever more competitive products as lenders compete for market share, is creating a much more optimistic and upbeat market.
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Justin Moy
Managing Director at EHF Mortgages
Demand was initially strong in the early Autumn as a number of borrowers moved to secure decent deals before the mini-Budget. Then, given how quickly mortgage rates increased, most borrowers were either panicking or biding their time. Rates shooting up after the mini-Budget saw many would-be borrowers sit on their hands. Things seem to have improved in the new year, as rates have settled and fixed rates continue to slide downwards. Now we need to wait and see if this continues. Fixed-rate pricing eased as money markets became more secure and confidence returned in part. 2023 has seen further easing, but lenders won't want to go below 4% alone in the market for fear of onerous activity levels, but a cartel-style approach by lenders may help ease the pressure.
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Mike Staton
Director at Staton Mortgages
The fourth quarter was a veritable rollercoaster. Not only did we see immense repercussions in the mortgage market from the car crash that was the mini-Budget, with lenders hiking rates sharply and borrowers sitting tight, we also had the World Cup and Christmas, a traditionally slow time of the year. Mortgage pricing became frankly ridiculous in the run-up to Christmas. It was as if Ebenezer Scrooge was setting the prices. We are already seeing a rise in the number of borrowers who have missed their latest mortgage payments. The past three years have been painfully hard on people’s finances anyway and soaring inflation and rising rates following the mini-Budget were the straw that broke the camel's back.
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Kylie-Ann Gatecliffe
Director at KAG Financial
Amid the sheer destruction and chaos the mini-Budget left in its path, a large amount of mortgage products were withdrawn from the market almost overnight. But when the dust settled and lenders repriced products on the higher swap rates and base rate, products started to return. We saw a slight drop in the amount of clients looking to purchase a property in the fourth quarter of last year, but the number of people lookingfor remortgage advice was still high. However this year we have seen an uplift in buyers returning to the market with more confidence than we saw in the closing stages of 2022. Pricing is looking much more positive and we have seen vast reductions across the market. Defaults have become more common since the pandemic and I believe we will see more this year as people feel a squeeze from a winter of rising energy costs.