The value of gross mortgage advances totalled £65.5bn in Q3, the highest figure since Q4 2022, data from the central bank showed.
The Bank of England’s (BoE’s) Mortgage Lenders and Administrators report showed the gross mortgage lending figure was also 8.9% higher than the previous quarter and up on £61.4bn during the same period last year.
The value of new mortgage commitments fell by 1.3% quarter-to-quarter to £66bn, but was 34% higher than last year, when this amounted to £49.2bn.
The outstanding value of all residential loans rose by 0.6% in the period since Q2 to £1.67trn. This was the highest stock of outstanding mortgages since the first quarter of 2021 and 0.8% higher than a year ago.
Share of high-LTV mortgage lending surges
The share of mortgages lent at high loan-to-value (LTV) tiers above 90% rose by 0.6% to account for 6.6% of lending, the highest share of business since Q2 2008. This type of lending was also 1.6% up on last year.
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Within this, the share of mortgages issued at above 95% was flat on the previous quarter at 0.4%, and 0.1% higher than last year.
The proportion of loans at LTVs exceeding 75% was also at a 16-year high, rising by 1.8% since Q2 to make up 44.5% of business in Q3. This was the highest share since Q1 2008 and also 5.1% greater than last year.
In Q3, the proportion of lending to borrowers with a high loan-to-income (LTI) ratio increased by 2.9% on Q2 to 45.3%. This was 0.1% lower than last year.
For borrowers with a single income and an LTI ratio of four or above, this rose by 1.2% from Q2 to Q3 to make up 9.5% of lending. This was 0.8% up on the same period in 2023.
Lending to borrowers with a joint income and an LTI ratio of three or above accounted for 35.8% of business in Q3, 1.7% more than in Q2 but 0.9% lower than a year earlier.
The share of gross mortgage advances with interest rates less than 2% above the bank rate, including at or below this level, fell by 0.4% quarter-to-quarter to 96.6%. This was flat on the year before.
The share of lending with interest rates between 2% and up to 3% above the bank rate rose by 0.2% quarter-to-quarter to 1.4%. This was 0.1% lower than last year.
The proportion of gross mortgage advances with interest rates at 3% or more than the bank rate came to 2%, 0.2% up on Q2 and 0.1% higher than the same period in 2023.
Lending to FTBs rises; BTL falls
The BoE data showed the share of gross mortgage lending for buy to let (BTL) declined by 1.1% from the previous quarter to 7.9%, but was 0.5% higher than last year.
The share of lending to owner-occupiers came to 92.1%.
Within this 92.1% of lending to owner-occupiers, remortgage advances dropped by 5.8% to a share of 22.8%. This was 7% lower than last year.
The proportion of lending for house purchase increased by 6.9% since the last quarter to 64.4%, the highest share of this business since Q2 2021. This was also 6.1% higher than in 2023.
Of the 64.4% share of lending for owner-occupied purchases, first-time buyers made up 29.3% of business. This was 1.9% more than in Q2 and 3.1% up on last year. The central bank said it was also the highest share since reporting began in 2007.
Lending to homemovers rose by 5% quarter-to-quarter to 35.1%, the largest increase since Q4 2020 and 2.9% higher than in 2023.
Gross lending for other mortgages, including lifetime mortgages, stayed flat quarterly at 4.9% but was 0.4% higher than the year prior.
New arrears fall as possessions increase
The share of new arrears cases as a proportion of all outstanding balances with arrears fell by 1.3% in the period since Q2 to 9.7%. This was 6.3% lower than in 2023.
The value of outstanding mortgages with arrears totalled £21.9bn, 0.4% less than in Q2 but 17.5% higher than the same period a year earlier.
Of this balance, the value of non-regulated mortgages with arrears amounted to £5bn. This was 0.1% up on Q2 and 21% higher than the previous year.
The share of mortgages in arrears stayed the same as Q2 at 1.3% but was 0.2% higher than the year before.
There were 2,074 new possessions in Q3, 4.6% higher than in Q2 and 45.5% up on 2023.
The total stock of possessions came to 6,976, 7.6% up on the preceding quarter and 42.4% higher than last year.
