The mortgage market “strengthened” in the final three months of last year to turn in higher 2024 first-time buyer and home mover loans compared to a year ago.
FTB mortgage loans rose by 16.4% to 334,000 last year, data from the latest UK Finance Household Finance Review shows.
Home movers lifted by 14.7% to 288,000, while total home moves were 15.6% higher at 622,000 last year.
“Cuts in mortgage offer rates, seen through much of the year, provided a boost to demand,” says the banking trade body.
It adds: “Some of the growth in the final quarter of the year, where both FTB and home mover numbers were up by almost a third compared to a year ago, is likely from borrowers looking to complete before the changes to stamp duty thresholds in April 2025.”
However, refinancing — external remortgaging and internal product transfer deals — was down 9% at 1.6 million transactions over the year.
The study points out: “Remortgage activity was relatively subdued, due in large part to somewhat lower numbers of fixed rate deals coming to an end through the year.”
But it adds that 1.8 million fixed-rate mortgages are due to expire this year.
Mortgages in arrears were 2.3% lower at 104,780, though repossessions jumped 34% to 6,440 in 2024.
The survey says: “While possessions continued to rise, numbers remained very low and relate almost entirely to older mortgages which have been in difficulty for some years and now need to exit their debt as efficiently as possible.”
The body points out that Financial Conduct Authority guidelines on responsible lending, dating back to 2014, and Financial Policy Committee rules that restrict lenders from granting more than 15% of new mortgages at over 4.5 times, dating back to 2017, income has restricted homebuying in the capital.
The banking association says: “Due to the much higher house prices, a significant amount of lending in the capital is at higher loan-to-income multiples.
“Currently around 30% of all lending at a loan-to-income ratio of more than 4.5 times takes place in London.
“What is notable is FTBs in London seeking to borrow below 4.5 times their income now have to find much larger deposits than before – in excess of 2.5 times their annual household income, compared with around 1.9 times before these rules came in — to make up for the lower loan size available.
“The layering of regulation, combined with house prices outstripping wage growth, has therefore made it more challenging for prospective buyers to access mortgage credit without substantial external financial support, such as assistance from family.”
The mortgage market expects the Financial Conduct Authority to loosen some restrictions on mortgage lending in the spring.
UK Finance managing director of personal finance Eric Leenders says: “The final quarter of 2024 showed the resilience of UK households amid changing economic conditions, with mortgage lending showing strong growth and arrears continuing their downward trend.
“The regulatory review of mortgage lending rules, which are arguably restricting the number of people who can access mortgage lending, will be welcome news for aspiring homeowners.
“Reviewing these rules would help with affordability issues, not just for FTBs but also those looking to move further up the housing ladder.”
