Nation is struggling desperately with sky high costs, says mortgage expert
The value of outstanding mortgage balances with arrears increased by 11.4% over the quarter and by 44% over the year to £18.8 billion in the third quarter of this year, the Bank of England (BoE) has reported.
New arrears cases from July to September decreased by 0.3% compared with the previous three months to 15.8% of the total outstanding balances with arrears but remained 5.1% higher than a year earlier.
By the end Q3 2023, the outstanding value of all residential mortgage loans decreased by 0.1% from the previous quarter to £1.65 trillion and was 0.8% lower than a year earlier.
The latest BoE Mortgage Lenders and Administrators Statistics also showed a 18.6% increase in the value of gross mortgage advances from the previous quarter to £62.2 billion – the first increase since Q3 2022, but remained 27.6% lower than a year earlier.
The value of new mortgage commitments – lending agreed to be advanced in the coming months – decreased by 16.5% from the previous quarter to £51.5 billion, and was 41.4% lower than a year earlier.
“This morning’s mortgage statistics from the Bank of England illustrate quite how much higher interest rates have sent the market into chaos,” commented Karen Noye (pictured), mortgage expert at wealth management business Quilter. “However, despite these scary figures house prices have yet to tumble, and in fact, have recently been rebounding. These green shoots may soon be killed off by a winter frost if rates increase again or if there is another economic shock but for now house prices are remaining resilient.
“One positive sign from the data is that the value of gross mortgage advances increased by 18.6% from the previous quarter to £62.2 billion, representing the first increase since 2022 Q3, but remained 27.6% lower than a year earlier. However, this comes from a low base.”
What is more worrying, Noye said, is that the value of new mortgage commitments is 41.4% lower than a year earlier, showing what an impact higher mortgage rates have had on people’s borrowing appetite.
“The nation is struggling desperately with sky high mortgage, food, and energy costs, and sadly some are falling behind,” she remarked.
“For those worried about going into arrears, it is critical that you speak to your lender as soon as possible and talk through your financial issues. Working out what’s best for you will be something that only you and your lender can conclude.”
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