According to the Bank of England’s (BoE’s) Mortgage Lenders and Administrators Return (MLAR) statistics for the period, this totalled £13.2bn which is a 0.7 per cent drop on Q1 and a 7.2 per cent annual decline. It is also the lowest value since the central bank began its records in 2007.
The proportion of loans in arrears decreased from 0.82 per cent to 0.80 per cent, which was also the smallest share since records began.
The BoE defines mortgages in arrears as those where the borrower is failing to make payments equivalent to at least 1.5 per cent of the outstanding balance, or where the property is in possession.
High income multiple lending
During the quarter, the data collated by 340 lenders and administrators showed that the share of lending to borrowers with a high loan to income (LTI) ratio rose by 0.9 per cent to a 50.5 per cent of borrowers. However, this was a decline of 0.9 per cent compared to the same period last year.
The bank defines high LTI lending as lending to borrowers with a single income at a ratio of four or above or to joint borrowers with and LTI of three or above.
High LTI lending to single income borrowers accounted for 11.3 per cent of gross mortgage lending in Q2, a 0.5 per cent fall on Q1. High LTI lending to joint income borrowers rose by 1.4 per cent to 39.2 per cent quarter-by-quarter, and accounted for the largest share of high LTI lending since records began.
Climbing rates
The share of gross mortgages with interest rates of less than two per cent above the base rate rose by 4.4 per cent to 89.9 per cent on a quarterly basis. The bank said this was the highest since Q3 2008 and mostly driven by the 50 per cent rise in the base rate over Q2, rather than any notable changes in mortgage interest rates.
This was when the base rate rose to 1.25 per cent, pushing it above one per cent for the first time since January 2009.
The share of mortgages with interest rates of between two and three per cent above the base rate fell from 9.8 per cent in Q1 to 6.6 per cent in Q2. Meanwhile, the proportion of mortgages with interest rates of three per cent or more above the base rate fell by 1.2 per cent to 3.5 per cent.
High LTV lending rebounds
The share of mortgages with loan to value (LTV) ratios exceeding 90 per cent rose by 0.5 per cent to 4.5 per cent, the highest seen since Q2 2020. This was also up by 2.4 per cent on the same period in 2021. Within this, the share of mortgage advances at 95 per cent LTV remained flat on Q1 at a 0.2 per cent share.
The proportion of mortgages with LTVs exceeding 75 per cent increased by 2.7 per cent to 38.2 per cent. This was 1.5 per cent down on last year.
Lending by borrower type
The proportion of mortgages lent for buy-to-let purposes stood at 13.6 per cent of all lending in Q2, which was an increase of 2.2 per cent compared to Q1. This was also the highest share seen since Q2 2020.
Owner-occupiers made up 86.4 per cent of lending. Within this, 27 per cent were remortgages, which represented a 10.5 per cent surge compared to the same period last year but a two per cent fall on Q1. Mortgages for purchase accounted for 52.4 per cent of advances in Q2, up 1.7 per cent on Q1 but a 14 per cent drop on last year.
First-time buyers accounted for 22.5 per cent of lending, a 2.2 per cent fall on the same period last year. However, this was up by one per cent on the previous quarter. Purchase mortgages for home movers dropped by 11.8 per cent annually to 30 per cent of lending, but this was up by 0.7 per cent compared to Q1 2022.
Further advances and other mortgages, including lifetime mortgages, made up 6.9 per cent of lending.
Gross lending falls annually
The value of gross mortgage advances in Q2 came to £77.9bn, a 12.6 per cent drop against the previous 12 months. However, this was up by £1bn when compared to Q1.
The value of newly agreed mortgages in Q2 was up by 1.7 per cent compared to Q1 at £83.9bn. This was down by 2.6 per cent on last year.
In total, the value of all residential mortgages stood at £1,648bn at the end of Q2, a 3.8 per cent rise on last year.
