But surge in new commitments recorded in Q1
The outstanding value of all residential mortgage loans fell slightly by 0.1% from the previous quarter to £1.65 trillion, marking a 1.4% decrease compared to a year earlier, the Bank of England (BoE) has reported.
Gross mortgage advances declined by 2.6% from the previous quarter to £51.6 billion, the lowest level since the second quarter of 2020. This represents a 12% drop from the same period last year.
However, the value of new mortgage commitments, which are loans agreed to be advanced in the coming months, rose by 30.8% from the previous quarter to £60.1 billion. This figure is 31.2% higher than a year earlier.
BoE’s latest Mortgage Lenders and Administrators Return also revealed a 3% decrease in lending to borrowers with a high loan-to-income (LTI) ratio from the previous quarter to 39.7%, the lowest since the first quarter of 2016. This is a 4.1% drop from the same period last year.
The share of gross mortgage advances for house purchases for owner-occupation decreased by 5.1% from the previous quarter to 54.6%, but this is 4.3% higher than a year earlier.
Remortgages for owner-occupation saw an increase, with their share of gross advances rising by 3.5 percentage points from the previous quarter to 31.8%. Despite this, the share is still 2.9 percentage points lower than a year ago.
The proportion of gross mortgage advances for buy-to-let purposes increased by 1.2% from the previous quarter to 8.3%, the first rise since the first quarter of 2022. Nonetheless, this is 1.6% lower than a year earlier.
New arrears cases decreased by 2% from the previous quarter, accounting for 11.4% of the total outstanding balances with arrears, the lowest since the third quarter of 2022. This represents a 4.7% drop from a year earlier.
Conversely, the value of outstanding mortgage balances with arrears increased by 4.2% from the previous quarter to £21.3 billion, which is 44.5% higher than a year earlier. The proportion of total loan balances with arrears relative to all outstanding mortgage balances rose from 1.23% to 1.28%, the highest since the fourth quarter of 2016.
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