Mortgage lending rises for the second consecutive quarter

Mortgage lending rose for the second consecutive quarter to reach £41.4bn in Quarter 3 (Q3), up 15% compared to the same three months of last year, according to latest data UK Finance.

Mortgage activity throughout 2024 has been very sensitive to changes in product pricing. In the third quarter, as lenders were able to reduce prices further, we saw application volumes increase. This points to further lending growth in the final quarter of 2024.

While affordability challenges have eased over the course of the year, they continued to impact both homebuyers and those looking to remortgage.

Internal product transfers, where an affordability assessment is not needed, remain popular and accounted for 83 per cent of all refinancing in Q3.

For first time buyers, despite the downward movement in rates this year, other factors including rising house prices are pushing affordability metrics back towards levels seen late last year, as show in the chart below:

The data also showed that arrears fell by 3% in Q3 to 106,630, which more than reversed the slight increase recorded earlier in the year.

Early arrears cases also fell again, suggesting we’ll see a further fall in total arrears numbers in Q4.

Repossession numbers were unchanged from Q2 to Q3 at 1,700, which remains considerably lower than before the pandemic, but the courts are still working through a backlog of cases dating back to before the pandemic

Eric Leenders, Managing Director of Personal Finance, said “We are seeing more signs that the cost-of-living pressures bearing down on households are beginning to ease, with mortgage lending and savings both increasing during the quarter. Notice accounts have proved popular for those households able to save more of their money.

“Although the challenges facing households are far from over, the picture that’s emerging from our data is one of gradual improvement. We know this will not be the case for all households though and I’d encourage anyone who might be struggling to reach out to their lender for support.”