Value of mortgage advances increases to £70bn

The latest mortgage lenders’ statistics suggest the housing market is cooling down, according to property experts.

In the latest figures published by the Bank of England, the outstanding value of all residential mortgage loans was £1,613.4 billion at the end of Q4, 2021 – up 4.7% on the same period the year before.

The value of gross mortgage advances in this period was £70.2 billion, 8.4% lower than in the fourth quarter of 2020. It was also the lowest level since the third quarter of 2020. The value of new mortgage commitments was 2% lower than in the third quarter and 11.9% less than a year earlier. The share for house purchase for owner occupation was also down 10.9 percentage points from the fourth quarter of 2020.

Commenting Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown said “We saw a remortage renaissance at the end of last year, as property owners leapt through the window of opportunity to lock in a cheap deal for years before higher rates took hold.”

“During the last three months of 2021, rate rise speculation took hold, so much so that the markets were surprised when the first rise was put off until December. Property owners realised that the era of cheap mortgages deals was coming to an end, so now was the time to get a new fixed rate deal while they were still around. Remortgages made up a larger proportion of mortgages than any time since the onset of pandemic. The value of remortgages for the coming months hit £27.3 million – the highest in three years, and the second highest since 2008.”

“Overall mortgage lending fell towards the end of the year, but we already know this was a blip because January figures have revealed buyers are still keen. Despite the recent rises, mortgage rates are still incredibly low, and with lockdown savings burning a hole in some people’s pockets, there are still compelling reasons to buy.”