According to figures from the Bank of England, the value of gross mortgage advances in 2021 Q1 was £83.3 bn, 26.5 per cent higher than in 2020 Q1, and the highest level since 2007.
Meanwhile lenders agreed to advance £77.5bn of mortgages in Q1, a 15 per cent rise on last year.
The proportion of mortgage deals with interest rates of less than two per cent above the Bank Base Rate fell year-on-year by 13 per cent to 59 per cent, highlighting that although deals have started to get cheaper as competition has returned to the market, rates remain higher than a year ago.
A fall of 4.1 percentage points in the share of mortgages advanced above 90 per cent loan to value (LTV) was noted by the Bank. That meant that just 1.1 per cent of all mortgages advanced in Q1 were above 90 per cent, the lowest proportion since the Bank’s mortgage lending series began in 2007.
House purchase advances accounted for just over 64 per cent of all lending in Q1, an increase of 17.3 percentage points compared to the same period last year. Residential remortgages declined year-on-year by 14 percentage points to 18 per cent marking another record low for the series.
Meanwhile, mortgage arrears are on the rise.
The value of outstanding balances with some arrears increased by 5.1 per cent over the quarter to £15bn, and now account for 0.96 per cent of outstanding mortgage balances.
Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “There has been frenzied activity in the market with movers searching for larger homes and more outdoor space, while the extension of the stamp duty discount to the end of June added more fuel to the fire in the first quarter of this year.
“The biggest stamp duty savings run out in just a few weeks’ time, yet measures from other housing indices suggest the frantic competition for property continues unabated.
“While lending may fall from these current highs, we still expect it to be an incredibly busy summer for the housing market.”