Outstanding value of mortgage loans increase by 2.6%

Latest data from the Bank of England has shown that the outstanding value of all residential mortgage loans increased by 0.7% from the previous quarter to £1,746.1 billion, and was 2.6% higher than a year earlier.

The value of gross mortgage advances decreased by 12.3% from the previous quarter to £69.6 billion, and was 10.2% lower than a year earlier.

Meanwhile, the value of new mortgage commitments increased by 11.5% from the previous quarter to £78.0 billion, and was 14.2% higher than a year earlier.

The share of gross mortgage advances with interest rates less than 2% above Bank Rate decreased by 0.2pp from the previous quarter to 94.7%, the lowest since 2023 Q1, and was 1.9pp lower than a year earlier.

The share of gross advances for remortgages for owner occupation increased by 2.7pp from the previous quarter to 28.1%, and was 6.8pp higher than a year earlier.

The value of outstanding mortgage balances with arrears decreased by 1.7% from the previous quarter to £20.1 billion, the lowest since 2023 Q3, and was 6.3% lower than a year earlier whilst the proportion of the total mortgage loan balances with arrears, relative to all outstanding mortgage balances, has stayed broadly consistent from the previous quarter at 1.1%, and was 0.1pp lower than a year earlier.

Rob Clifford, Chief Executive of Stonebridge Mortgage said “It looks like a contraction and an expansion at the same time if you look at what happened to lending and new commitments in the first quarter, but these wild swings in the numbers are really just a mirage.

“Ignoring the annual figures this time around is the only way to take the temperature of the market, all thanks to a distortion last year. A stamp duty cliff edge had caused a rush of applications and lending, creating both flattering and unflattering year-on-year comparisons.

He added, “However, there’s still plenty of momentum out there. In fact, despite the invasion of Iran in February, new mortgage approvals are holding their own and were up significantly the very next month, also rising year on year. Even if the unresolved situation in the Middle East and rising borrowing costs does dent new home purchases, we’re still in the midst of a remortgaging wave due to a pandemic boom in transactions five years ago, and this will smooth out the effect of any volatility for advisers who position themselves well in the coming months.”