Mortgage availability for potential homeowners in the UK is set to improve over the forthcoming months, a report by the Bank of England has said.
Figures from the Trends in Lending report found that availability dropped slightly in the third quarter of the year. However, this trend is expected to reverse as more mortgage products are launched by providers.
This projection is in correlation with Moneyfacts data that shows the number of residential mortgage products topped 1,400 last month for the first time since March.
The Bank's figures also found that the cost of new mortgage increased in the last quarter, albeit from 4.2 per cent to 4.3 per cent.
The report found that the majority of lenders expected availability to improve in the fourth quarter of 2008, a perception it said was largely driven by an improved outlook for house prices and the UK economy as a whole.
"Lenders appetite to lend may be further supported by the reduction in default rates," it added.
Remortgaging, credit card borrowing and loans were all found to have remained weak over the three month period.
"As we surmised when we published our September gross lending data on Tuesday, the new report confirms that September saw a continuation of the two-speed mortgage market, with lending for house purchase continuing to increase but remortgaging remaining weak," Michael Coogan, director general of the Council of Mortgage Lenders, said.
"But, also as we have highlighted, funding conditions remain challenging, despite the encouraging signs of a slight thaw in wholesale funding markets.
"Today's report very much confirms our own assessment of market prospects - the most likely scenario is a slow and long-drawn out recovery."
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