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Bank of England data reveals mortgage lending up as arrears continue to fall

  • 11/06/2019
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Bank of England data reveals mortgage lending up as arrears continue to fall
Gross mortgage lending grew by 1.4 per cent to £63.3bn in Q1 2019, official figures from the Bank of England show.


Although the gross figure was up from £62.4bn in Q1 2018, it was 8.3 per cent lower than £69bn in Q1 2017.

The amount of lending committed and to be advanced in the coming months was £63.8bn, up 4.5 per cent on Q1 2018. New commitments were worth £64.9bn in Q1 2017.

The share of mortgage loans agreed with loan-to-value (LTV) of more than 90 per cent rose to 4.5 per cent, up from 3.3 per cent in Q1 2018. This was the highest level since Q2 2017.

Meanwhile, the proportion of high loan-to-income (LTI) lending climbed to 45 per cent, or 0.8 percentage points higher than in 2018. The LTI data covers loans more than four times the value of annual income for a single buyer or three times for joint buyers.


Arrears continue to fall

The industry picked up on the statistics relating to arrears. The value of balances in arrears fell to £14.4bn and the proportion of all loan balances in arrears continued a downward trend, reaching 0.99 per cent—the lowest since the series began in Q1 2017.

Mark Pilling, managing director at Spicerhaart Corporate Sales, said: “Borrowers are taking out bigger and bigger loans, suggesting that they are stretching themselves too thin, and that if and when rates do rise, they may start to struggle.

“It’s important that lenders look at all cases on their books, and if they have concerns about borrowers who are already struggling, or are likely to, down the line, to speak to them sooner rather than later.”

“It’s good news that arrears continue to fall, but these statistics don’t necessarily mean that people are no longer experiencing financial difficulties. It’s more a sign that lenders are doing all they can to help those borrowers who are struggling to avoid arrears and repossessions,” Pilling added.

Chris Sykes, mortgage consultant at Private Finance, said: “As high LTV and LTI lending increases, the proportion of loans in arrears has fallen to its lowest point since this series began in 2007. This proves that high LTV lending has its place in the market and shouldn’t be written off as ‘risky’.

“High LTV loans are the only route onto the property ladder for many first-time buyers and, with today’s stringent affordability checks in place, this should be seen as a viable choice.”


Interest rates hold steady

The proportion of mortgages advanced with interest rates lower than two per cent above the Bank Rate was 83.4 per cent. It was the first time this share has not risen since Q3 2016.

The share of buy-to-let lending was 14 per cent, marginally lower than in 2018. The slice of lending going to owner-occupiers for house purchases was 46.1 per cent, of which first-time buyers was flat at 19.2 per cent.

Keith Haggart, managing director of Responsible Lending, added: “The number of first-time buyer mortgages and amounts borrowed hasn’t really changed, they are just putting down smaller deposits.”

 The Bank of England’s Mortgage Lenders and Administrators Return (MLAR) collects data from 340 regulated mortgage lenders and administrators.

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