Mortgage lending balances hit new peak

The total outstanding balance of residential mortgages reached a record £1,678.2 billion in Q4 2024, an increase by 0.5% from the previous quarter to according to latest Bank of England data.

The rise is attributed to first-time buyers, who accounted for nearly 30% of new lending. The average age of first-time buyers is now 33.5 years, with deposits averaging around £50,000. The data also showed that gross mortgage advances rose by 4.9% to £68.8 billion, marking a 30% increase from the previous year. This was the largest quarterly uplift since the final quarter of 2022 and a 29.9% jump on a year ago, said the central bank’s latest Mortgage Lenders and Administrators Statistics.

The value of outstanding mortgage balances with arrears increased from the previous quarter to £22.1 billion and was 8.4% higher than a year earlier.

New arrears case, as a proportion of total outstanding balances with arrears — increased by 2.3% from the previous quarter to 12%, but remained 1.5% lower than a year earlier. The proportion of the total mortgage loan balances with arrears relative to all outstanding mortgage balances has remained stable at 1.3% compared to the previous quarter, marking only a slight 0.1pp increase from a year earlier.

Tom Cuppello, Director, Risk, at Broadstone said “The final quarter of 2024 saw total outstanding mortgage loans reach a record high, but despite this, the proportion of mortgage loans in arrears has remained relatively stable.

“While there has been an increase in the absolute value of arrears, the fact that new arrears cases remain lower than the same period last year and possessions have slightly declined suggests that financial pressures, while still present, may be less acute than before.

“However, despite easing mortgage rates and a rush to complete property purchases ahead of tax changes in April contributing to record mortgage lending, households are still facing historically high rates and cost-of-living challenges.

“The Bank of England is expected to lower interest rates gradually in 2025, while upcoming tax rises in April and ongoing macroeconomic and geopolitical uncertainties still present potential headwinds. Given these factors, it will be crucial for lenders to balance their approach, ensuring they support customers while navigating evolving financial conditions.”