In the first three months of 2017 the value of new loans for house purchase fell by 5.1 percentage points to 60.9% of all lending – the lowest this has been for house purchases for five years. The bank noted this was driven by a dropping number of first-time buyers.
Brokers have suggested that projected figures for lending in 2017 may need to be revised as the stagnant market shows little signs of rejuvenation. Others believe the election uncertainty is to blame.
In the first quarter of 2017 £60.4bn of new residential loans was advanced to individuals, 3.8% down on the previous quarter and 5.6% lower than the same period last year.
The total value of all outstanding residential loans stood at £1,347.3bn in Q1, a 0.7% increase from the previous quarter and a 3.3% increase from the same quarter last year. However this year on year increase in the stock value of outstanding residential loans is 0.3% lower than it was in the previous quarter.
Consistent with the trend to remortgaging, more lending is taking place at lower LTVs, with 67.2% of new lending at 75% LTV or less.
And lower interest rates are prevalent too – the proportion of new loans extended at the lowest rates has been increasing since Q3 2016.
Lending at 2% above base rate now accounts for 59.2% of new advances, while higher rate products continued to decline, accounting for 12.4% of new advances.
The share of new lending in the lowest loan-to-income (LTI) brackets, for both single and joint incomes, also increased compared to the previous quarter. However, the higher LTI brackets still continue to dominate the market.
Since the first quarter of 2016, the share of buy-to-let lending has stabilised at a lower level and accounted for 14.2% of residential home loans transactions in Q1 2017.
The proportion of loans in arrears decreased to 1.26% at the end of March, the lowest level since the series began. The outstanding balance in arrears is now £17.0bn.