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Value of gross mortgage advances drops to four-year low – BoE

  • 11/06/2024
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Value of gross mortgage advances drops to four-year low – BoE
The value of gross mortgage advances completed in Q1 totalled £51.6bn, the lowest figure since Q2 2020, central bank data revealed.

The Bank of England (BoE) Mortgage Lenders and Administrators Statistics showed this was also a 2.6% decline on the value of gross mortgage advances during the previous quarter and a 12% fall on the period the year before. 

However, the data showed there was a rise in the value of new mortgage commitments, reflecting lending to be agreed in the coming months. This came to £60.1bn in Q1, which was 30.8% higher than the preceding quarter and 31.2% greater than the year before. 

The value of all outstanding mortgages reached £1.6trn, which was 1.4% lower than the same period in 2023 and a marginal 0.1% on the previous quarter. 


Rise in FTB and BTL mortgage business

The BoE figures revealed a 1.2% increase in the share of gross mortgage advances for buy-to-let (BTL) purposes to 8.3% of lending, marking the first increase in business since Q1 2022.

However, this was still 1.6% lower than the share of BTL mortgage advances during the same period a year earlier. 

The share of advances to owner-occupiers was 91.7% in Q1. 

Within the proportion of advances to owner-occupiers, lending to first-time buyers rose by 1.9% quarter-on-quarter to make up 25.8% of activity. This was also 2.9% up on the year before. 

The share of gross mortgages advanced to homemovers contracted by 3.3% from Q4 2023 to Q1 2024 to make up 28.8% of lending. This was 1.4% up on the same period last year. 


Drop in new mortgage arrears 

There was a 2% fall in new mortgage arrears cases over the Q1 period to account for 11.4% of outstanding balances. This was 4.7% down on last year. 

Meanwhile, the value of outstanding mortgage balances in arrears rose quarterly by 4.2% to £21.3bn. This was 44.5% higher than the same period last year and the highest value since Q3 2014. 

The total share of loans in arrears increased slightly from 1.23% to 1.28% from Q4 2023 to Q1 2024. This was the highest proportion recorded since Q4 2016. 


Borrower profiles 

The share of gross mortgage advances with interest rates less than 2% higher than the base rate increased by 0.5% from the previous quarter to account for 96.1% of loans in Q1. This was 2.1% higher than the year before. 

The share of advanced mortgages with an interest rate between 2% and 3% higher than the base rate fell from 1.8% to 1.6% quarter-to-quarter. The proportion of loans with interest rates 3% or more above the base rate contracted by 0.3% to account for 2.3% of gross advances in Q1. 

Some 5.2% of gross mortgage advances in Q1 had a loan-to-value (LTV) ratio exceeding 90%, which was 0.3% lower than the previous quarter and 1.2% higher than the year before. 

Within this cohort, the share of loans with LTVs over 95% was flat both quarterly and annually at 0.3%. 

The share of mortgages advanced with ratios higher than 75% in Q1 declined by 22% to account for 37.9% of business. This was a 5.4% annual increase.

The proportion of lending to borrowers with a high loan-to-income (LTI) ratio fell by 3% quarterly to 39.7%. This was down by 4.1% on the year before and the lowest share since Q1 2016. 

The BoE defines borrowers with a high LTI as single-income people with an LTI ratio of four or above, or joint-income borrowers with an LTI ratio of three or above. 

The share of gross advances to high-LTI single borrowers fell by 0.7% to make up 8% of lending, the lowest recorded since Q1 2009. 

Meanwhile, the proportion of high-LTI lending to joint borrowers fell by 2.3% quarterly and accounted for 31.7% of gross advances.

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