This was the lowest level of new commitments since the first quarter of 2010 when the value reached £33.7bn.
According to the Mortgage Lenders and Administrators statistics, this was also a 53 per cent decline on the £73.4bn agreed during the same period last year.
The value of gross mortgage advances also fell during the quarter to £44.1bn, 33 per cent lower than the £66.1bn value last year. This is also at its lowest level since Q2 2013, when it was valued at £41.6bn.
High LTV lending stable
The share of mortgage lending exceeding 75 per cent loan to value (LTV) saw a slight dip to 36.5 per cent during a quarter, a decline of 3.2 per cent compared to last year.
Despite recent challenges around mortgages at higher LTV tiers, the share of lending above 90 per cent LTV decreased by just 0.4 per cent to 4.9 per cent. Lending above 95 per cent LTV remained flat at 0.3 per cent.
Buy to let resilience
The share of lending for buy to let purposes saw a 1.2 per cent yearly rise to 14.4 per cent, while owner occupiers accounted for 85.6 per cent of advances.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the buy to let sector showed itself to be resilient in the midst of a lockdown.
“It proves that investors were still keen to look for opportunities in the rental market at a time when alternative investments offered little comfort,” he added.
Of the owner occupiers, remortgages accounted for 37.7 per cent of advances, an increase of 8.2 per cent on last year. This was the only type of lending to see a quarterly increase, rising from a share of 32.1 per cent in Q1.
The proportion of house purchase lending fell during the quarter, making up 41.6 per cent. Compared to last year, this was down by 8.9 per cent and on Q1, this was down from a share of 47 per cent.
Lending to first-time buyers accounted for 18.2 per cent of advances, a yearly drop of 3.1 per cent. This was also down on the 19.8 per cent share they held in Q1.
Homemovers continued to be the most impacted by the restrictions imposed on the housing market, as lending to this segment recorded its lowest share since 2009, dropping to 23.4 per cent. Compared to Q1 when there were no restrictions on movement due to the pandemic, this was down from a share of 27.2 per cent.
On the same period last year, the proportion of lending to homemovers dropped 5.8 per cent.
Further advances and other mortgages, including lifetime products, accounted for 6.3 per cent of advances combined.
Jonathan Harris, managing director of Forensic Property Finance, said: “The impact of the pandemic comes through loud and clear in these figures from the Bank of England with the value of new mortgage commitments dropping dramatically in the second quarter.
“The market should bounce back in the third quarter in response to the mini boom in the housing market.”