Mortgage lending increases by 0.3%

Latest data from the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA has shown that the outstanding value of all residential mortgage loans increased by 0.3% from the previous quarter to £1,703.6 billion, and was 2.6% higher than a year earlier.

Mortgage Lending and Administration Return (MLAR) data shows that mortgage advances decreased by 24.2% from the previous quarter to £58.8 billion, the lowest since 2024 Q1, and was 2.4% lower than a year earlier.

The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 14.6% from the previous quarter to £78.2 billion, the highest since 2022 Q3, and was 16.8% higher than a year earlier.

The share of gross mortgage advances for house purchase for owner occupation decreased by 10.3pp from the previous quarter to 56.0%, the lowest share since 2024 Q1, and was 1.4pp lower than a year earlier.

New arrears cases (as a proportion of total outstanding balances with arrears) decreased by 0.4pp from the previous quarter to 8.8%, the lowest since 2022 Q1, and was 2.2pp lower than a year earlier.

The value of outstanding mortgage balances with arrears decreased by 1.0% from the previous quarter to £20.9 billion, the lowest since 2023 Q4, and was 4.6% lower than a year earlier.

Commenting on the data, Martyn Smith, CEO, Black & White Bridging said “Today’s MLAR data paints a picture of increasing buyer confidence. Although the value of gross mortgage advances is down on last quarter, new mortgage commitments and remortgages are on the up, a clear sign of increased borrower activity, likely spurred on by the recent base rate cut. 

“We can see evidence here of increasing appetite even amongst those with smaller deposits as the share of advances with LTV ratios exceeding 90% rose again to 7.1%, the highest figures since 2008. Of course, this is also reliant on increased risk-taking from lenders, which is clearly necessary with rising inflation putting pressure on the cost of living and a buyer’s capacity to save.

“Although it would hit savings, further interest rate cuts are the only way to increase buyer confidence further and keep up borrower momentum. Lenders will need to remain agile and flexible to those with lower up-front deposits, at least until the inflation versus base rate balance settles.”