In  mortgage news, the Bank of England released its survey of the 3rd quarter credit conditions in the UK.

According to this report, the high street banks reduced the supply of mortgages and other credit to households during the third quarter, in contrast to the previous quarter which had seen more mortgage availability.

This shrinkage occurred despite te fact that  banks had promised to increase their lending. Bank representatives said they were unable to do this because of the deterioration in the cost and availability of funds.

Paul Samter, economist for the Council of Mortgage Lenders, was quoted in the report: “Lenders reported a welcome reduction in default rates on mortgages in the third quarter – the first in two years. Following our own figures showing a decline in mortgage possessions in the previous three months, there are encouraging signs that households are coping better than expected with difficult conditions. Despite this, however, we still expect payment problems to increase in the coming months, given the weak economy and jobs market.

“The survey also reported a small reduction in mortgage availability in the second quarter, mainly due to an unexpected deterioration in the cost and availability of funds for lenders themselves. More encouragingly, however, the survey found that lenders expect mortgage availability to improve modestly in the next three months.

“There have been recent signs of an improvement in wholesale funding market conditions, and the survey records a notable pick-up in lenders’ expectations that this will continue in the next three months.”