Commentary on Mortgage lending statistics Q1 2024

The value of gross mortgage advances decreased by 2.6% (£1.4 billion) from the previous quarter to £51.6 billion, the lowest since 2020 Q2, and was 12.0% lower than a year earlier (Table A and Chart 1).

The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 30.8% from the previous quarter to £60.1 billion, and was 31.2% greater than a year earlier (Table A and Chart 1).

The share of gross mortgage advances with interest rates less than 2% above Bank Rate increased by 0.5 percentage points (pp) from the previous quarter to 96.1%, and was 2.1pp higher than a year ago (Chart 2).

The share of advances with interest rates between 2% and 3% above Bank Rate decreased over the quarter to 1.6% from 1.8%, while the share of advances with interest rates 3% or more above Bank Rate decreased by 0.3pp from the previous quarter to 2.3%.

The share of gross mortgage advances with loan-to-value (LTV) ratios exceeding 90% decreased by 0.3pp from the previous quarter to 5.2%, but remained 1.2pp higher than a year ago (Chart 3).

Within this, the share of mortgages advanced with LTVs over 95% has stayed consistent from the previous quarter at 0.3%. This was the same as a year earlier.

The share of mortgages advanced in 2024 Q1 with LTV ratios exceeding 75% decreased by 2.2pp on the quarter to 37.9%, but remained 5.4pp higher than a year earlier.

​​​​​​The proportion of lending to borrowers with a high loan to income (LTI) ratio decreased by 3.0pp from the previous quarter to 39.7%, and was 4.1pp lower than a year earlier. This was the lowest since 2016 Q1 (Chart 4). Borrowers with high LTI are defined here as:

• Borrowers with single income who had a LTI ratio of 4 or above. This decreased by 0.7pp from the previous quarter to 8.0% of gross mortgage lending, the lowest observed since 2009 Q1.
• Borrowers with a joint income who had a LTI ratio of 3 or above. This decreased by 2.3pp from the previous quarter to 31.7% of gross mortgage lending.

The share of gross mortgage advances for buy-to-let purposes increased by 1.2pp from the previous quarter to 8.3%, the first increase since 2022 Q1, but remains 1.6pp lower than a year earlier (Chart 5). The share of advances to owner occupiers was 91.7%.

Of the 91.7% of advances for owner occupiers, the share of gross advances for remortgages for owner occupation increased by 3.5pp from the previous quarter to 31.8%, but remained 2.9pp lower than a year earlier. The share for house purchase decreased by 5.1pp from the previous quarter to 54.6%, but remained 4.3pp higher than a year earlier. Further advances and other mortgages (including lifetime mortgages) accounted for 5.3% of gross advances in total.

Of the 54.6% of advances for house purchases by owner occupiers, lending to first-time buyers decreased by 1.9pp from the previous quarter to 25.8% of gross advances, but remained 2.9pp higher than a year earlier. The share advanced to home movers decreased by 3.3pp from the previous quarter to 28.8%, but remained 1.4pp higher from a year earlier.

New arrears cases decreased by 2.0pp from the previous quarter, to 11.4% of the total outstanding mortgage balances with arrears (defined as the borrower failing to make contractual payments equivalent to at least 1.5% of the outstanding mortgage balance or where the property is in possession), and was 4.7pp lower than a year earlier.

The value of outstanding mortgage balances with arrears increased by 4.2% from the previous quarter to £21.3 billion. This was 44.5% higher than a year earlier and the highest since 2014 Q3 (Chart 6).

The proportion of the total loan balances with arrears, relative to all outstanding mortgage balances, increased on the quarter from 1.23% to 1.28%. This is the highest since 2016 Q4.