The Bank of England has published its latest mortgage lenders and administrators return (MLAR) is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.

The figures show that the value of outstanding mortgage balances with some arrears increased for the first time since 2016 Q2 to £14.5 billion, compared to £14.3 billion in 2018 Q2. 

The figures also show that the outstanding value of all residential mortgage loans continued to increase in 2018 Q3 to £1,430 billion, 3.2% higher than a year ago (2017 Q3). The value of gross mortgage advances grew 3.7% in the year to 2018 Q3, to £73.5 billion. This was the highest level since 2007 Q4.

Remortgaging, as a proportion of new lending, is 2 percentage points higher than a year ago. However, it decreased marginally on the quarter to 30% (Chart 5)

George Robbins, Director of Financial Services at TransUnion (formerly Callcredit) said “Despite ongoing uncertainty around Brexit, the latest figures reveal that new mortgage lending in Q3 was 4.7% higher than a year ago. This increase will come as a surprise to many, as the housing market was widely expected to stall in the latter part of this year in the wake of the final deal for our departure from the EU being agreed. However, this surge will possibly continue as homebuyers aim to secure their new property and complete a move before Brexit day on 29 March next year.”

“Whilst it’s positive that the political uncertainty of the protracted negotiations hasn’t impacted the housing market – and in fact overall gross mortgage lending is at its highest since 2007 – it’s important to note that there is an increase in the proportion of high loan-to-income lending, as well as lending where the loan-to-value exceeds 90%. Lenders need to be exercising caution here and ensuring that they are conducting thorough affordability assessments and that these customers, who would be less cushioned in the event of a downturn, are not overstretching themselves.”

Mark Pilling, Spicerhaart Corporate Sales managing director, said “The latest mortgage lenders and administrators statistics reveal that the value of outstanding mortgage balances with some arrears increased for the first time since 2016 Q2 to £14.5 billion.”

“With the recent rate rises, I had predicted we would start to see arrears rise again, and I fear this could be the start of a more permanent shift. Consumers racked up a record £17.1billion of credit card debt in October, 11.6% higher than a year earlier, and October is not usually a month associated with big spending. Since those stats, we have had a record spending day on Black Friday, most of which was online so likely to be spent on cards, and we have Christmas coming up – traditionally a time when many families overstretch themselves in terms of spending.

“There are growing  concerns that many people are now relying on credit cards for everyday purchases, and while many in this situation are able to keep their heads above water now, if there is another rate rise, payment shock coming off a fixed rate deal or rise in the cost of living, many people may struggle to make their monthly mortgage payments or rent – which in turn will impact landlords and where appropriate their ability to make mortgage payments.”

“Repossession should always be the last resort and lenders should always look to find another option if it is available. We can help lenders find solutions that best suit them and their customers, so it is important that lenders start looking at all their borrowers and identify those who are already having difficulties managing their mortgage or are likely to experience future difficulties.”

Shakila Hashmi, Head of Mortgages, at comparethemarket.com said “Whilst it is encouraging to see lending is on the rise, the mortgage market still has fault lines running through it. Mortgage arrears rising and the highest loan-to-value loans seeing an increase over the quarter may raise concerns over growing consumer debt levels, especially with the prospect of further interest rate hikes on the horizon. Buying a home is a huge financial commitment and it is vital that borrowers understand both how much they can borrow and, crucially, how much they can afford to pay every month. Our research estimates that nearly 13 million people in the UK do not think they would be eligible to borrow any money in the form of a mortgage, but 74% have never taken any steps to increase their chance of being approved for one. ”