Bank of England (BoE) statistics revealed that the value of new mortgage commitments green-lit in Q4 to be released in the coming months decreased by 6.6 per cent from the previous quarter to £46bn and were 21.2 per cent lower than a year earlier.
The value of actual lending in Q4 fell by 13.4 per cent quarter-on-quarter to £54bn, representing a 33.8 per cent reduction on the same period in 2022.
Meanwhile, the value of outstanding mortgage balances with arrears increased by 9.2 per cent from the previous quarter to £20.3bn and was 50.3 per cent higher than a year earlier. The proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, increased on the quarter from 1.12 per cent to 1.23 per cent, the highest since Q4 2016.
Simon Gammon, managing partner at Knight Frank Finance, said: “At 1.23 per cent, the proportion of loan balances in arrears is still very low, but the pace at which it is rising will be a source of concern for policymakers at the BoE.
“The housing market has shown remarkable resilience given the surge in borrowing costs that we’ve seen. Much of that is down to forbearance from lenders, which has kept forced selling very low.
“While borrowing costs have likely peaked and should begin falling meaningfully over the summer, the figures demonstrate that we’re not yet out of the woods, and conditions remain very difficult for many borrowers.”
The proportion of lending to borrowers with a high loan-to-income (LTI) ratio decreased by 2.6 percentage points from the previous quarter to 42.7 per cent and was 6.6 percentage points lower than a year earlier.
A slight increase of one percentage point quarter-on-quarter took the share of gross mortgage lending for house purchases to 58.7 per cent, a rise of 3.3 percentage points on the previous year.
Of the 58.7 per cent, lending to first-time buyers increased by 1.2 percentage points from the previous quarter to 27.1 per cent of gross advances, the highest since reporting began in 2007, and was three percentage points higher than a year earlier.
The proportion of advances for remortgages decreased by 0.8 percentage points from the previous quarter to 29.7%, but was 2.3 percentage points higher than a year ago.
For buy to let (BTL), covering house purchasing, remortgaging and further advances, the share of mortgage lending decreased by 0.5 percentage points from the previous quarter to 7%, the lowest since Q3 2010, and 4.9 percentage points lower than a year earlier.
At the end of last month, the BoE reported a rise in approvals for January.
