Demand for mortgages to buy a home fell at the end of 2021, and lenders expect it to fall further in the first three months of 2022.

That’s according to the latest Bank of England Credit Conditions Survey of lenders.

However, lenders said demand for remortgaging increased in the final quarter of last year, though they expect it to fall slightly in the first three months of 2021.

Mortgage arrears are expected to increase in the first three months of this year, which is unsurprising given the rate of inflation, the Base Rate increase and rising energy costs.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “Demand for mortgages has fallen, and is set to continue doing so as the housing market slows. There was a flurry of remortgaging at the end of the year, but the banks expect this activity to drop off in the first three months of this year.”

But Ross Boyd, CEO of mortgage switching platform, Dashly doesn’t recognise the dip in lending reported: “Many brokers will be left scratching their heads at the fact lenders are saying demand tailed off in the three months to November,” he said.

“In our experience it was as strong as ever and the loans were there to accommodate it. Remortgages were particularly strong during the final quarter of 2021. On that I think everyone can agree. The prospect of rate rises was increasingly on people’s radars and this incentivised many to act. Lenders were competing hard on rates even at higher loan-to-values, and this was another key driver, especially for first-time buyers.”

Andrew Montlake, managing director of mortgage broker, Coreco, agreed: “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 Bank of England is reporting demand decreased. That’s not what we saw on the ground.”