Borrowing for house purchase in Q1 2024 was down compared with the first quarter of 2023, according to the latest figures from UK Finance.
Towards the end of last year as mortgage rates started to reduce, there was a noticeable uptick in the number of mortgage applications. This suggested the market might see a recovery in the first half of 2024 as the applications followed through to completions. However, UK Finance says any sustained recovery "has yet to materialise" as market expectations for a Base Rate reduction shift to later in the year.
For those who did secure a mortgage, the trend of borrowing at longer terms to reduce monthly repayments and help with affordability dipped slightly in Q1 but remained high, with 21% of new first-time buyers extending terms over 35 years.
UK Finance says the trend of longer-term mortgages points to "more entrenched affordability issues" as costs and house prices remain high relative to incomes.
Affordability constraints are also changing the pattern of re-financing, with external lending falling 21% compared to Q1 2023. Internal product transfers, where an affordability assessment is not needed, continued to be popular, growing 9% year-on-year.
Mortgage arrears and possessions
The number of mortgage customers in arrears grew to 110,150 in Q1 2024, but the rate of growth was modest – up from 107,250 cases in Q4 2023. Early arrears cases fell slightly in Q1 2024, indicating any increase in arrears next quarter will again be limited. There were 1,470 mortgage repossessions in Q1 2024, below pre-pandemic levels.
