The report showed that lending for house purchases fell throughout Q3, continuing the trend that started at the end of 2022, with customers facing significant affordability constraints from increases in the cost of living and higher interest rates. First-time buyer activity was down by almost one fifth and home movers by one quarter, compared to Q3 2022.
Mortgage lending was weak in almost every segment of the market but can be seen most acutely in the tighter end of affordability. In 2021, 57% of first-time buyers had household incomes of less than £50,000 - whereas in 2023, this number fell to 46%, with these customers are now having to put down deposits equal to twice their annual earnings, significantly more than in recent years. However, borrowers with higher incomes have not seen the same shift in increased deposit requirements.
Mortgage arrears are rising - however, UK Finance stressed that this is from a low base and around 99% of borrowers are still able to meet their monthly repayments.
