Value of mortgage balances with arrears also rises significantly year on year
The total value of residential mortgage loans in the UK rose by 0.6% in the third quarter of 2024 to £1.67 trillion, representing a 0.8% increase compared to the same period in 2023, according to the Bank of England (BoE).
Gross mortgage advances also increased by 8.9% from the previous quarter to £65.5 billion, marking the highest new advances since the fourth quarter of 2022. Year-on-year, gross advances were up by 6.7%.
New mortgage commitments, which represent lending agreed to be advanced in the coming months, decreased by 1.3% quarter-on-quarter to £66 billion, but remained 34.2% higher than the same period last year.
BoE’s latest Mortgage Lenders and Administrators Return also revealed a 0.6% rise in the share of gross mortgage advances with loan-to-value (LTV) ratios exceeding 90% from the previous quarter to 6.6%, also 1.6 percentage points higher than a year ago.
The share of gross mortgage advances for owner-occupier purchases increased by 6.9% from the previous quarter, reaching 64.4%. This figure was also 6.1% higher year-on-year. In contrast, the share of gross advances for remortgages for owner-occupiers fell by 5.8% to 22.8%, down 7% from a year earlier.
Meanwhile, buy-to-let mortgage advances, including for house purchases, remortgages, and further advances, saw a fall of 1.1 percentage points from the previous quarter to 7.9%, but were 0.5 percentage points higher than the same time last year.
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New arrears cases dropped by 1.3% to 9.7% of the total outstanding balances with arrears, a 6.3 percentage point decline compared to the previous year. The value of mortgage balances with arrears fell by 0.4% from the previous quarter, reaching £21.9 billion — but is 17.5% higher than a year ago.
The proportion of total loan balances with arrears stayed the same as the previous quarter at 1.3%, but remained 0.2% higher than a year ago.
“The impacts of the significant increases to mortgage rates over the past couple of years is reflected in a notable rise to the value of mortgage balances with arrears,” commented Tom Cuppello, director of risk at independent financial services consultancy Broadstone. “This is now slowing and new arrears cases are also falling as households adjust to the new rate environment but there remains further pain to come.
“The macroeconomic environment remains uncertain and volatile so there can be no let up from lenders in the support they offer to their customers. As we head into a difficult period of the year for personal finances, it is evident that lenders need to remain proactive in supporting the long-term financial interests of their customers.”
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