The outstanding value of all residential mortgages decreased by 0.1% from the previous quarter, to £1,654.3bn in Q3, the Bank of England’s Mortgage Lenders and Administrators Statistics report has revealed.
The value of gross mortgage advances increased by 18.6% from Q2 to £62.2bn in Q3, marking the first increase since 2022 Q3.
The value of new mortgage commitments decreased by 16.5% from the previous quarter to £51.5bn, and was 41.4% lower than the same period in 2022.
The proportion of lending to borrowers with a high loan-to-income (LTI) ratio increased by 3.9% from the previous quarter to 49.3%, and the share of gross mortgage advances for house purchase for owner-occupation increased by 3.5%.
The share of gross advances for remortgages for owner-occupation decreased by 2.7% to 29.4%, but remained 4.4% higher than last year.
The share of gross mortgage advances for buy-to-let (BTL) purposes – covering house purchase, remortgage and further advance – decreased by 0.7% to 7.5%, the lowest since 2010 Q3.
New arrears cases decreased by 0.3% to 15.8% of the total outstanding balances with arrears.
The value of outstanding mortgage balances with arrears increased by 11.4% from the previous quarter, to £18.8bn, and was 44.0% higher than a year earlier.
The proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, increased from 1.02% to 1.14%, the highest since 2017 Q2.
Reaction:
Karen Noye, mortgage expert at Quilter:
“This morning’s mortgage statistics from the Bank of England, illustrate quite how much higher interest rates have sent the market into chaos.
“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 £62.2bn, 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 is that the value of new mortgage commitments is 41.4% lower than a year earlier showing quite what an impact higher mortgage rates have had on people’s borrowing appetite with many potential buyers opting to sit on their hands during this unpredictable period.
“Elsewhere, unsurprisingly the share of gross mortgage advances for buy-to-let purposes decreased further to the lowest level since 2010 Q3.
“This demonstrates quite how inhospitable the tax environment has become for landlords. Many are now choosing to not bother adding to their property portfolios or leave the market altogether as a result.
“Landlords have faced successive changes to the tax landscape over the last few years making it harder and harder to turn a profit.
“Despite this, rents have skyrocketed as the number of properties available to rent dwindles.
“Most worryingly the data shows that the value of outstanding mortgage balances with arrears increased by 11.4% from the previous quarter, to £18.8bn, and was 44.0% higher than a year earlier.
“The nation are struggling desperately with sky high mortgage, food and energy costs and sadly some are falling behind.
“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.
“Burying your head in the sand is possibly the worst thing you can do as lenders can often find ways to help you get through a tough financial period whether it’s by putting you on an interest only mortgage or even giving you a mortgage holiday. Working out what’s best for you will be something that only you and your lender can conclude.”
