Lenders expect mortgage availability to increase in early 2026 – survey

Mortgage availability is expected to edge up over the three months to the end of February, according to a Bank of England survey of lenders.

Banks and building societies also reported that mortgage availability to households had increased in the three months to the end of November 2025.

But lenders also reported that demand for mortgage lending among home buyers fell in the final quarter of 2025 – and was expected to fall in the first quarter of 2026.

Remortgaging demand was unchanged in the last few months of 2025 and was expected to increase in early 2026.

Lenders also reported that default rates on mortgages to households fell in the final months of 2025 and were also expected to decrease in early 2026, the Money and Credit report said.

Meanwhile, credit card defaults increased in the last few months of 2025, and were expected to increase further in early 2026.

Demand for credit card borrowing increased in the final months of 2025 and was expected to be unchanged in the first quarter of 2026.

Lenders also reported that corporate lending from small, medium, and large businesses was unchanged in the final months of 2025 and was expected to remain unchanged in early 2026.

They also said that default rates on loans increased slightly for small businesses, and were unchanged for medium and large businesses in the final months of 2025.

The Bank of England carries out a survey of banks and building societies each quarter, to help it understand trends and developments in credit conditions as part of its role in maintaining financial stability.

The latest survey was carried out between November 10 and December 3 last year.

Banks and building societies were asked to report changes in the three months to the end of November 2025 relative to the previous three months, as well as expected changes in the three months to the end of February 2026, relative to the period between September and November.

Lenders’ views do not necessarily reflect the Bank of England’s views on credit conditions.

Karim Haji, global and UK head of financial services at KPMG, said: ”The rise in unsecured lending and softening in mortgage demand both point to the affordability pressures and uncertainty that continue to weigh on households, as many held off on major purchases but turned to credit to cover the cost of Christmas.

“The increase in short-term borrowing fed through to a rise in defaults, highlighting the growing financial stress many consumers are facing.”

Several mortgage lenders have announced mortgage rate cuts in recent weeks, with HSBC UK and Nationwide Building Society reducing rates on Thursday.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With (mortgage) lenders reducing their rates in recent days and weeks, shopping around to see what is available from other lenders, rather than automatically taking the product transfer from your existing lender, is a sensible approach.”

The Royal Institution of Chartered Surveyors (Rics) said on Thursday that expectations among property professionals for house sales and prices are becoming more positive.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “This morning’s Rics survey suggests that the housing market rebounded after the budget, so the Credit Conditions Survey is likely too pessimistic.”

He said the Bank of England survey captured the “peak of budget uncertainty, whereas the December Rics survey tells us what happened after the budget”.

Simon Gammon, managing partner, Knight Frank Finance, said: “Lenders were concerned that the budget might prompt a bout of macroeconomic volatility and that didn’t come to pass.

“Instead, most of the major lenders cut mortgage rates during the first fortnight of January, which is fuelling momentum. We expect activity to keep picking up as the lenders continue to trim rates during the weeks ahead.”