Mortgage lending to homebuyers is expected to fall by 23 per cent next year as the cost of living squeeze and rising interest rates make property less affordable.
Figures from UK Finance, which represents banks and other financial firms, predict that loans for home purchases will fall to £131billion from £171billion this year.
It is another sign that the property market is slowing down – after data showed house prices falling over three months.
Squeeze: Figures from UK Finance predict that loans for home purchases will fall to £131billion from £171billion this year
The figures come ahead of an expected 0.5 per cent hike in interest rates on Thursday, inflicting further pain on borrowers.
UK Finance expects property transactions to fall 21 per cent next year to 1m. Overall mortgage lending is set to fall 15 per cent, taking into account the likely rise in those seeking to refinance fixed-term deals.
That number is expected to hit 1.8m as deals taken during the stamp duty holiday come to an end.
Meanwhile, the number of mortgages in arrears is expected to climb to 98,500.
UK Finance researcher James Tatch said: ‘The mortgage market is expected to enter a period of relative weakness from next year.’
