Growth in mortgage lending set to fall this year

Research by the EY Item Club suggests growth in mortgage lending is set to fall to 0.4% this year, its lowest level in more than a decade. Higher interest rates, a weak economic outlook and falling house prices will dampen demand along with a tightening of banks’ lending criteria. Anna Anthony, UK financial services managing partner at EY, warned: "Stretched affordability will affect loan demand across all fronts and banks should be preparing for low and, in some cases, negative lending growth rates." Lending to businesses grew by 3.7% in 2022, but is expected to fall by 3.8% this year, before returning to growth of 0.9% next year. Dan Cooper, UK head of banking at EY, said UK businesses faced rises in interest rates but much of the borrowing over the course of the pandemic was in the form of government-guaranteed loans with low interest rates. Meanwhile, corporate balance sheets had strengthened as stresses associated with the pandemic eased. 

The Daily Telegraph (06/02/2023)   The Times (06/02/2023)