Credit, Collections & Insolvency News
The value of new mortgage agreements has reached a 13-year high after rising over 24% in Q4 according to new data from the Bank of England (BoE).
The figures showed that more mortgages have been agreed for early 2021 than any time since the financial crisis Mortgage commitments (agreed for the coming months) were £87.7 billion at the end of 2020. This was 24.2% more than a year earlier and the most since before the onset of the financial crisis.
The outstanding value of all residential mortgage loans was £1,541.4 billion at the end of 2020 Q4, 2.9% higher than a year earlier.
The value of gross mortgage advances in 2020 Q4 was £76.6 billion, 4.2% higher than in 2019 Q4 whilst the value of new mortgage commitments (lending agreed to be advanced in the coming months) was 24.2% higher than a year earlier, at £87.7 billion, and the highest level since 2007 Q3.
The value of outstanding balances with some arrears increased by 3.4% over the quarter to £14.3 billion, and now accounts for 0.93% of outstanding mortgage balances.
Sarah Coles, Personal Finance Analyst, Hargreaves Lansdown said “The race for space has turned out to be more of a marathon than a sprint. We’ve been snapping up mortgages at the fastest rate since the onset of the financial crisis – and that was even before we knew the stamp duty holiday would be extended. However, not everyone is in this particular race, and some homeowners are completely exhausted.”
The mortgage market was booming at the end of last year, and the mortgages being agreed for the start of 2021 were at their highest for 14 years. This was even before the stamp duty holiday extension, which is likely to have brought more reluctant buyers back to the fray.”
“But not everyone is enjoying this boom. If you need a mortgage with a high loan to value, deals are thinner on the ground than they have been at any time since 2007. In this context, you can understand why the government decided to step in and offer guarantees for high LTV mortgages.”
“Meanwhile, arrears are starting to grow. Let’s not get ahead of ourselves, arrears are still incredibly low: right now they’re at 0.93% compared to 3.64% in early 2009. However, during the pandemic millions of borrowers have been able to rely on payment holidays, so have been able to avoid paying without running up arrears. Now that support is winding down, anyone who’s still struggling is running out of road. When the FCA asked people in October, 19.6 million expected to be struggling to pay the bills or service their debts by April. By the time we get the March figures, arrears could look much worse.”