"he Bank of England’s latest mortgage statistics reflect a modest but important growth in both mortgage lending and commitments, with gross mortgage advances rising by 16.7% from the previous quarter. "
- Simon Webb, managing director of capital markets and LiveMore
The value of gross mortgage advances increased by 16.7% between Q1 and Q2 to £60.2 billion, the first increase since Q3 2022 and 15.5% higher than a year earlier, the latest Mortgage Lenders and Administrators Statistics from the Bank of England show.
The quarterly statistical release is aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.
The figures show that the value of new mortgage commitments increased by 11.3% from the previous quarter to £66.9 billion, and was 12.5% greater than in Q2 2023.
The proportion of lending to borrowers with a high loan to income ratio increased by 2.7pp from the previous quarter to 42.5%, but remained 1.2pp lower than a year earlier.
The share of residential lending increased by 2.9pp on a quarterly basis to 57.5%, and was 3.1pp higher annually.
The share of residential remortgage lending fell by 3.3pp from the previous quarter and 3.7pp compared to last year.
Buy-to-let lending (covering house purchase, remortgage and further advance) increased by 0.7pp from Q1 and was 0.8pp higher than a year earlier.
The data also shows that new arrears cases are beginning to fall, down by 0.5pp from the previous quarter, to 11.0% of the total outstanding balances with arrears. New arrears cases are now 5.3pp lower than a year earlier.
However the value of outstanding mortgage balances with arrears increased by 2.9% from the previous quarter, to £21.9 billion, and was 32.0% higher than a year earlier. The proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, increased on the quarter from 1.29% to 1.32%, the highest since Q2 2016.
Simon Webb, managing director of capital markets and LiveMore, commented: "The Bank of England’s latest mortgage statistics reflect a modest but important growth in both mortgage lending and commitments, with gross mortgage advances rising by 16.7% from the previous quarter.
“However, amidst this growth, we also see challenges, particularly with the increased proportion of lending to high loan-to-income borrowers and the rising value of mortgage balances with arrears, which has reached its highest point since 2016."
Melanie Spencer, sales and growth lead at Target Group, said: “It’s clear from today’s figures that borrowers have responded well to the positive changes in the market, as the value of both gross mortgage advances and new mortgage commitments increases. Growing competition among lenders off the back of movement on swap rates and the bank base rate has clearly helped put a potential move back on the radar for many people.
“While it is positive to see a drop in new arrears cases, mortgage balances with arrears continues to increase in value, while total arrears remain far higher than 12 months ago. Combine this with a rise in high LTI lending and an increase in higher LTV lending – albeit only marginally - and there’s no question that lenders will need to stay close to number of borrowers. A sensible approach to managing the loan lifecycle remains key, as well as both early remediation strategies and identifying vulnerable customers – particularly as Consumer Duty remains a priority for the regulator. This will continue to be the case even as the picture for the market and wider economy seems to improve.”
