New mortgage advances lifted to a two-year high rising 4.9% to £68.8bn in the final three months of last year compared to the previous quarter, according to Bank of England data.
This was the largest quarterly uplift since the final quarter of 2022 and a 29.9% jump on a year ago, said the central bank’s latest Mortgage Lenders and Administrators Statistics.
It added that the value of new mortgage commitments — lending agreed to be advanced in the coming months — also increased by 4.9% from the previous quarter to £69.3bn, the highest since the third quarter of 2022, and was 50.7% higher than a year earlier.
Lending to first-time buyers increased by 3 basis points from the previous quarter to 29.6%, the highest share since reporting began in 2007, up 1.9% from a year ago.
Gross advances for remortgages for owner occupation increased by 7bps from the previous quarter to 23.5%, but was 4.8% lower than a year earlier.
This year 1.8 million home loans come to the end of their current two- and five-year deals, according to UK Finance.
Lending to borrowers with a high loan-to-income ratio increased by 5bps from the previous quarter to 45.8%, the highest since the final quarter of 2022, and was 3.1pp higher than a year ago.
Nationwide called on the government to review the industry’s loan-to-income mortgage cap in a bid to help more FTBs onto the property ladder last month.
But Bank of England governor Andrew Bailey has said “a public debate” is needed over the trade-off between higher repossessions and more people entering the mortgage market brought about by lower stress testing.
New arrears cases — as a proportion of total outstanding balances with arrears — increased by 2.3% from the previous quarter to 12%, but remained 1.5% lower than a year earlier.
Gross mortgage advances to landlords lifted by 3bps from the previous quarter to 8.2%, and was 1.2% higher than a year ago.
Quilter financial planner Holly Tomlinson says the data shows that the home loans market “remains remarkably resilient”.
Tomlinson adds: “Looking ahead, interest rates will remain a key factor shaping the market. While expectations are growing that the Bank of England cut rates further later this year, there is still uncertainty over when and by how much.
“Many lenders have already lowered mortgage rates slightly, but with borrowing costs still higher than they were a few years ago, affordability pressures persist.
“Changes to stamp duty in 2025 could also weigh on demand, particularly for first-time buyers who currently benefit from higher tax-free thresholds.”
