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Gross mortgage advances rise 17 per cent YOY to £85.9bn – BoE
Gross mortgage advances in Q3 emerged at £85.9bn, up £8bn on the previous quarter and 17 per cent higher year-on-year.
According to the Bank of England’s mortgage lenders and administrators’ statistics, the value of new mortgage commitments, so, lending advances agreed over the next few months, came to £87.8bn.
This is the highest recorded since Q3 2007 and 11.2 per cent higher than the same period last year and 4.5 per cent on the prior quarter.
Within gross advances, those with interest rates of less than two per cent above the base rate was 93 per cent, which is up nearly 36 per cent compared to last year and the highest since 2008.
The share of advances with interest rates between two and three per cent fell to 4.2 per cent from 5.3 per cent over the quarter. Advances with interest rates of three per cent or more fell by 0.5 per cent to 2.8 per cent from Q2.
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Higher LTV and LTI lending shows growth
The share of gross mortgage advances with a loan to value (LTV) exceeding 90 per cent was five per cent. This is the largest peak since Q1 2020 and up 0.9 per cent on the same period last year.
Advances over 95 per cent LTV came to 0.2 per cent, which the report said was broadly in line with the previous quarter.
Mortgages advanced with an LTV ratio over 75 per cent LTV increased by 0.2 per cent on the quarter to 38.4 per cent. This is 1.9 per cent lower than the same period last year.
The report also found that the proportion of lending to borrowers with a high loan to income ratio (LTI) grew by one per cent on the quarter to 51.5 per cent and is three per cent higher on last year.
The report said that this is the highest since recording began in 2007.
High LTI ratio lending is defined as single borrowers with an LTI of four or above, or three or above for joint borrowers.
For borrowers with single income, high LTI ratio loans accounted for 11.2 per cent of gross mortgage lending, which is roughly in line with the previous quarter.
Borrowers with a joint income with an LTI of 3 or above made up 40.3 per cent of gross mortgage lending. This is 1.1 per cent up on the previous quarter.
Purchase and remortgage activity up on last year but signs of slowing
The report said that the share of gross mortgage advances for buy-to-let purposes came to 12.5 per cent in Q3, around 1.2 per cent down on the previous quarter but 0.6 per cent up on the same period last year.
The share of advances to owner occupiers was 87.5 per cent, the report noted.
Within that, remortgages came to 24.9 per cent, a rise of two per cent since last year, but down 2.1 per cent since the prior quarter.
The share for house purchase was 56.1 per cent, up 3.7 per cent on the previous quarter but down 2.7 per cent from the same period last year.
Further advances and other mortgages accounted for 6.4 per cent of gross advances in total.
The report said that of the 56.1 per cent of advances for house purchases by owner occupiers lending to first-time buyers was one per cent lower than last year at 2.3 per cent of gross advances.
The shares advanced to home movers decreased by 1.7 per cent on a year earlier, to 32.9 per cent, but was 2.9 per cent up on the prior quarter.
Arrears at lowest level since 2007
The value of outstanding balances with arrears, which is defined as the borrower failing to make contractual payments equivalent to at least 1.5 per cent of the outstanding mortgage balance or where the property is in possession, came to £13.1bn.
This a fall of 1.4 per cent on the quarter and 5.1 per cent on a year earlier. The report added that this was the lowest it has been since recording began in 2007.
The proportion of total loan balances with arrears decreased on the quarter from 0.80 per cent to 0.78 per cent, which the report said was the lowest since recording began.