Lenders see downturn in mortgage lending in Q3 2026 ahead of Budget
The Bank of England’s latest Credit Conditions Survey shows that lenders reported a fall in demand for secured lending for house purchase in Q3 2026 (Jun-Aug), but that they are predicting this to increase heading into Q4. Likewise, demand for secured lending for remortgaging fell in Q3, and was expected to rise in Q4.
Overall demand for unsecured lending was unchanged in Q3 and was expected to be increase in Q4. Within the overall figure, demand for credit card lending was unchanged in Q3, and was expected to be unchanged in Q4. Demand for other unsecured lending slightly increased in Q3, and was expected to increase in Q4
Richard Pinch, senior director, Banking & Credit Advisory at leading independent banking & credit advisory consultancy Broadstone, commented: “The latest Credit Conditions Survey suggests the summer months saw a downturn in consumer demand for major borrowing, with demand for secured lending for house purchase falling in the third quarter.
“After a period of improving confidence earlier in the year, renewed uncertainty over the domestic political and economic outlook, alongside the resurgence of tensions in the Middle East, appears to have weighed on household spending and financial decisions over the summer.
“While lenders are expecting demand for mortgage and remortgage lending to pick up in the final quarter, there are reasons to question how quickly that recovery will come through. With the Autumn Budget looming and BOE interest rate hikes potentially on the horizon, households may remain cautious about making major financial commitments.
“The latest RICS survey points to pressure in the housing market already building as we enter the final quarter, with buyer enquiries, agreed sales and house prices all falling in September as higher borrowing costs and economic uncertainty weigh on demand.
“For lenders, understanding individual affordability will remain key in this uncertain environment. A more nuanced assessment of borrowers’ financial circumstances will be essential to ensure consumers can access credit where appropriate, while avoiding commitments that may become difficult to manage if household finances come under further pressure.”