14 March 2023

Value of new mortgage lending falls by quarter in a year, figures show

14 March 2023

The total value of new mortgage lending commitments fell by about a third (33.5%) in the fourth quarter of 2022, compared with the previous three months, Bank of England figures have shown.

The £58.4 billion-worth of lending agreed to be advanced in the coming months was also about a quarter (24.5%) less than a year earlier, according to the mortgage lenders and administrators statistics.

If the onset of the Covid-19 pandemic and period immediately after were excluded, this would have been the lowest total seen since the first quarter of 2015, the Bank said.

The share of mortgages advanced in the fourth quarter of 2022 with LTV (loan-to-value) ratios above 75% decreased by 1.4 percentage points compared with the previous quarter, to 37.0%, but remained slightly higher than a year earlier.

The number of people falling into arrears on their mortgage is starting to rise

The value of outstanding balances with arrears increased for the first time since the first quarter of 2021, to £13.6 billion.

Increases in the Bank of England base rate have been pushing up borrowing costs generally.

Mortgage rates also jumped following September’s mini-budget.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Mortgage approvals dropped like a stone at the end of 2022, after the mini-budget sent rates soaring, and sent would-be buyers scurrying back into their own homes.”

She added: “Arrears will also be one to watch. We’re still near historic lows, but the number of people falling into arrears on their mortgage is starting to rise.”

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