The outstanding value of all residential mortgage loans increased by 0.6% from the previous quarter to £1,670.9bn, the latest data from The Financial Conduct Authority (FCA) has revealed.
This figure marked the highest stock of outstanding mortgage loans since 2023 Q1, as well as a growth of 0.8% compared to a year earlier.
In addition, the value of gross mortgage advances increased by 8.9% from the previous quarter to £65.5bn, the highest new advances since 2022 Q4.
This was also 6.7% higher than Q3 2023.
Lastly, the value of new mortgage commitments (lending agreed to be advanced in the coming months) decreased by 1.3% from the previous quarter to £66.0bn, but remained 34.2% higher than a year earlier.
Holly Tomlinson, financial planner at Quilter, said: “The latest data from the FCA show that the mortgage market is generally looking somewhat brighter.
“According to the data, the value of gross mortgage advances increased by 8.9% from the previous quarter to £65.5bn, marking the highest new advances since the ill-fated mini-Budget, after which interest rates soared and market demand significantly dampened.
“This surge underscores renewed momentum in lending activity, likely bolstered by stabilising interest rates and improved buyer confidence.
“However, the value of new mortgage commitments, which reflect future lending agreements, fell slightly by 1.3% from the previous quarter, though they remain 34.2% higher than a year earlier, showing significant improvement over the year.
“Interestingly, the share of mortgage advances with loan-to-value (LTV) ratios above 90% rose to 6.6%, the highest since 2008, reflecting increased risk-taking as lenders seek to attract buyers with smaller deposits.
“Some might worry about the correlation with the financial crisis however lending criteria is much stricter than it was then with stress testing rules dictating customers can afford their mortgages even in a volatile interest rate environment.
“Conversely, remortgaging activity dropped to 22.8%, down from the previous quarter, as many homeowners have already locked in deals during the earlier rate-hiking cycle.”
