Demand for home loans is exploding ahead of yet another ‘likely’ rise in interest rates

Demand for mortgages to finance a home purchase fell back in the three months to the end of November when it stamp duty the holiday is drawing to a close.

In a Bank of England study reported lenders that they expect the availability of home financing will increase in the first quarter of this year, mainly driven by a significant increase in demand from existing homeowners who want to re-borrow.

Andrew Montlake, CEO of London-based independent mortgage broker Coreco, pointed to the growing likelihood of further base rate hikes after the Bank of England raised interest rates from 0.1 per cent to 0.25 per cent late last year.

“Mortgages were definitely on fire in the closing stages of 2021 as rumors of a rate hike grew stronger and stronger,” he said. “People wanted to lock in low prices and lock them in quickly.”

Contrary to the claim of lenders, who report that the demand for home financing fell between September and the end of November, Mr Montlake said the demand for home buying was also strong.

“It’s a mystery that the Bank of England is reporting declining demand. That was not what we saw on earth,” he said. I.

Ross Boyd, CEO of Dashly, said the prospect of much higher inflation in 2022 caused many homeowners to lock in lower mortgage rates before lenders start charging more if the Bank of England raises base rates again.

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“In the coming quarter, there is likely to be another rate hike from the Bank of England, and this will undoubtedly have an impact on mortgage rates,” he said.

“But even then, interest rates remain astonishingly low, especially at lower mortgage rates. 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 coming months as they prepare for a period with economic turbulence. “

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