New commitments also up significantly
The total value of residential mortgage loans in the UK rose by 0.4% in the second quarter of 2024 to £1.66 trillion, representing a 0.3% increase compared to the same period in 2023, according to the Bank of England.
Gross mortgage advances climbed 16.7% from the previous quarter to £60.2 billion, marking the first quarterly increase since the third quarter of 2022. Year-on-year, gross advances were up by 15.5%.
New mortgage commitments, which represent lending agreed to be advanced in the coming months, increased by 11.3% quarter-on-quarter to £66.9 billion, 12.5% higher than the same period last year.
BoE’s latest Mortgage Lenders and Administrators Return also revealed a 2.7% rise in lending to borrowers with a high loan-to-income (LTI) ratio from the previous quarter to 42.5%, although this remains 1.2 percentage points lower than a year ago.
The share of gross mortgage advances for owner-occupier purchases increased by 2.9% from the previous quarter, reaching 57.5%. This figure was also 3.1% higher year-on-year. In contrast, the share of remortgages for owner-occupiers fell by 3.3% to 28.6%, down 3.7% from a year earlier.
Meanwhile, buy-to-let mortgage advances, including for house purchases, remortgages, and further advances, saw a slight increase, rising by 0.7 percentage points from the previous quarter to 9%, and were 0.8 percentage points higher than the same time last year.
New arrears cases dropped by 0.5% to 11% of the total outstanding balances with arrears, a 5.3 percentage point decline compared to the previous year. However, the value of mortgage balances with arrears rose by 2.9% from the previous quarter, reaching £21.9 billion — 32% higher than a year ago.
The proportion of total loan balances with arrears increased slightly from 1.29% to 1.32% in the second quarter, the highest level since the second quarter of 2016.
“The Bank of England’s latest mortgage statistics reflect a modest but important growth in both mortgage lending and commitments, with gross mortgage advances rising by 16.7% from the previous quarter,” commented Simon Webb, managing director of capital markets at later life lender LiveMore.
“However, amid this growth, we also see challenges, particularly with the increased proportion of lending to high loan-to-income borrowers and the rising value of mortgage balances with arrears, which has reached its highest point since 2016.”
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