Mortgage lenders in the UK are expecting the number of borrowers defaulting on their home loans to increase in the coming months, according to a recent survey.
A quarterly study of credit conditions released by the Bank of England showed that default rates on secured loans remained unchanged in the second quarter but are expected to increase in the third quarter.
The study added that default rates on unsecured loans dropped for a seventh consecutive quarter but are also predicted to increase.
The availability of mortgages remained flat in the second quarter, a trend that many banks and building societies believe will continue in the next three months. Analysis also showed that the availability of unsecured credit is expected to rise in Q3, following a period of stagnation in Q2 2011.
The study added that demand for home loans increased, driven by landlords seeking to purchase buy-to-let properties.
Vicky Redwood, a senior economist at Capital Economics, said the study reflects a rather bleak image for the UK mortgage market. “There was little in the Bank of England’s latest credit conditions survey to suggest that bank lending is set to pick up any time soon,” she said.
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