Demand for secured lending for house purchases fell in the final quarter of last year, according to a new report from the Bank of England (BoE).

In the bank’s latest credit conditions survey, lenders reported a net balance of -34.8 when asked how demand had changed.

The same lenders gave an answer of -28.7 when asked about the next three months – suggesting demand will likely drop in Q1 2022.

However, when asked about demand for remortgaging, lenders reported this increasing, replying with a net balance of 70.4 – although a net balance of -7.2 was supplied when asked about the next three months.

When asked about availability of secured credit available to households, the lenders quizzed gave a net balance of 23.1 for the final quarter of 2021 and a net balance of 15.1 for the next quarter.

Lenders look set to continue supplying loans to first-time buyers – asked if they have become more willing to lend to borrowers with equity of 10% or less, a net balance of 19.8 was provided for the end of last year and, for the next three months, the lenders gave a net balance of 30.7.

And overall spreads on secured lending to households narrowed at the close of last year, with lenders providing a net balance of 87.9. For the next three months, lenders expect a further narrowing, giving a net balance of 2.1.

SPF Private Clients chief executive Mark Harris says: “Lenders have money to lend and remain keen to lend it.

“However, at the same time, demand for mortgages for house purchase decreased in Q4, a trend which is forecast to continue this quarter.

“There was a pick-up in remortgaging in the fourth quarter, although this is expected to fall away slightly this quarter. However, with many mortgage deals set to expire this year, it is likely that many borrowers will take the opportunity to remortgage, particularly given the cheap fixes still available and the potential threat of rising interest rates.”

Some market watches are puzzled at the survey’s findings. Coreco managing director Andrew Montlake says: “Remortgages were definitely on fire in the closing stages of 2021 as rumours of a rate rise grew stronger and stronger. People wanted to lock into low rates and lock into them fast.

“Demand for house purchase was also strong so it’s an enigma that the BoE is reporting demand decreased. That’s not what we saw on the ground.”

Meanwhile, Your Mortgage Decisions director Dominik Lipnicki says: “There’s a definite disconnect with lenders saying demand decreased. Following on from Rishi Sunak’s Budget and the anticipated BoE base rate rise, we did see an increase in mortgage rates offered in the final months of 2021, and as long as you could qualify for a mortgage, the deals were still at near record low levels.”

And Dashly chief executive Ross Boyd adds: “Many brokers will be left scratching their heads at the fact lenders are saying demand tailed off in the three months to November.

“In our experience it was as strong as ever and the loans were there to accommodate it.”