Outstanding residential mortgage loans rose 0.3% from the previous quarter to £1,703.6bn, up 2.6% on the year, according to the latest Mortgage Lenders and Administrators Return (MLAR) data.
Gross mortgage advances fell by 24.2% to £58.8bn, the lowest since Q1 2024, and 2.4% lower than a year ago.
New mortgage commitments climbed 14.6% to £78.2bn, the highest since Q3 2022, up 16.8% compared to the previous year.
The share of gross mortgage advances with loan-to-value (LTV) ratios over 90% increased 0.4 percentage points to 7.1%, the highest since Q2 2008.
Lending to borrowers with a high loan to income ratio dropped by 3.7 percentage points to 41.5%, the biggest fall since Q1 2023.
Gross mortgage advances for house purchase for owner occupation fell by 10.3 percentage points to 56%, the lowest since Q1 2024.
Remortgages for owner occupation rose by 7.7 percentage points to 29%, the highest since Q1 2024.
New arrears cases as a proportion of outstanding balances with arrears fell by 0.4 percentage points to 8.8%, the lowest since Q1 2022.
The value of outstanding mortgage balances with arrears dropped by 1.0% to £20.9bn, the lowest since Q4 2023.
REACTION:
Mark Harris, CEO of mortgage broker SPF Private Clients:
“The fall in value of gross mortgage advances reflects the end of the stamp duty concession whereby buyers brought forward purchases to the first quarter in order to take advantage of the savings to be made.
“However, the increase in value of new mortgage commitments to the highest level since Q3 2022, an indicator of future lending activity, indicates a growing resilience in the market, with borrowers confident to take on debt.
“There may no longer be a stamp duty concession available but several base-rate reductions – with the prospect of more to come – are easing affordability and enabling borrowers to plan ahead and commit to purchases.
“Although lenders have been easing criteria, the decrease in lending to borrowers with a high loan-to-income ratio suggests that borrowers are not overextending themselves and rushing to take out bigger loans.
“However, with lending to first-time buyers decreasing compared with the previous quarter it remains tricky for those trying to get on the ladder for the first time, particularly if they don’t have help from the Bank of Mum and Dad.”
Richard Pike, chief sales and marketing officer at Phoebus:
“The latest MLAR data paints a broadly positive picture for the mortgage market. Overall lending is edging upwards and, importantly, arrears are continuing to fall, with both the number of new cases and the value of balances in arrears now at multi-year lows.
“This demonstrates the resilience of households in managing repayments despite ongoing affordability pressures.
“It is also encouraging to see new mortgage commitments at their highest level since 2022, signalling a strong pipeline of activity for the coming months.
“While gross advances dipped sharply this quarter, the growth in remortgage activity reflects borrowers’ focus on securing the best possible deals in a volatile rate environment.
“Taken together, the data suggests a market that is steadying, with both lenders and borrowers adapting well to challenging conditions.”
