There has been an increase in the value of gross mortgage advances between Q1 and Q2, with figures increasing by 16.7% to £60.2 billion. It marks the first increase since Q3 2022 and is 15.5% higher than a year ago, so says the latest Mortgage Lenders and Administrators Statistics from the Bank of England.
The data is aggregated on information provided by around 340 regulated mortgage lenders and administrators who provide mortgage lending services.
Based on the statistics, there has been an increase in new mortgage commitments, increasing by 11.3% from the previous quarter to £66.9 billion, which is 12.5% higher than Q2 last year.
There has also been an increase in the proportion of lending to borrowers with a high loan to income ratio, rising 2.7pp from Q1 to 42.5%, although the figure remains 1.2pp lower than the same quarter in 2023.
Residential remortgage lending fell by 3.3pp from the previous quarter and 3.77p compared to the previous year.
Buy-to-let lending grew by 0.7pp from Q1 and stood 0.8pp higher than a year earlier.
New arrears are slowly staring to decline, falling 0.55 from Q1 to Q2 to 11.0% of the total outstanding balances with arrears. There has also been a fall in new arrears cases, which are now 5.2pp lower than last year.
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.”
