UK lenders expect mortgage supply and demand to fall in Q3: BoE survey

LONDON (Reuters) - British lenders reported the biggest increase in mortgage defaults since 2009 in recent months and they expect to curb the availability of home loans and unsecured borrowing, a Bank of England survey showed on Thursday.

The gauge for reported mortgage defaults in the BoE's quarterly Credit Conditions Survey rose in the second quarter to 30.9 from 14.0 in the first quarter - the highest reading since mid-2009 when the same indicator topped 60.

"Lenders reported that losses and default rates on secured loans to households increased in Q2, and were expected to increase in Q3," the BoE said.

The survey also showed lenders expect demand for mortgages to fall sharply in the third quarter.

Most economists expect activity in Britain's housing market to cool as consecutive interest rate rises since late 2021 increasingly feed through to mortgage costs.

A survey on Thursday from the Royal Institution of Chartered Surveyors showed a big decrease in new buyer enquiries.

(Reporting by Andy Bruce; editing by David Milliken)