The latest Credit Conditions Survey from the Bank of England has revealed that demand for secured lending for house purchase was reported to have decreased significantly in 2014 Q4, compared with lenders’ expectations of a rise.

Lenders expected demand to increase slightly over the next three months.

Lenders reported that demand for both credit card lending and other unsecured lending products, such as personal loans, increased significantly in Q4. Further increases in demand were anticipated in 2015 Q1.

While demand for credit from small businesses was reported to have decreased in Q4, demand from medium-sized companies increased significantly. Demand for credit from large corporates increased slightly in 2014 Q4.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “Although 2014 marked a restorative year for the UK mortgage market, the impact of tighter lending regulations meant availability of secured lending took a hit in Q3. However, this recovered markedly by the end of the year, with lenders upbeat that credit supply will be maintained in early 2015. Now the Mortgage Market Review changes and further FCA restrictions have had time to bed in, potential buyers are likely to find their chances of accessing mortgage finance have improved.

“Decreased availability of mortgage finance had a knock-on effect in terms of declining consumer demand in the final quarter of 2014. However, this is likely to have been exacerbated by seasonal variations as the housing market wound down before Christmas. Lenders predict that demand will rise again in Q1 2015, and current conditions support this view: the mortgage rate war continues to rage on, with consumers benefiting from record low rates as lenders vie for business.

“Improving access to the housing market for the first-time buyers remains a key focus as we begin the New Year, so it is concerning that lenders became less willing to lend at loan to value (LTV) ratios above 90% in Q4 2014. While Help to Buy has done much to improve the availability of 95% loans, it is important that high LTV lending does not depend too heavily on the scheme. Lenders must ramp up their 95% LTV offering to ensure potential buyers with small deposits are not left behind in the housing market recovery.”