Commentary on Mortgage lending statistics - June 2020

• The value of gross mortgage advances was £65.8 billion in 2020 Q1, 3.8% higher than in 2019 Q1 (Table A and Chart 1).
• The value of new mortgage commitments (lending agreed to be advanced in the coming months) was 6.1% higher than a year earlier, at £67.6 billion. 

• The distribution of interest rates relative to Bank Rate for gross mortgage advances changed significantly in Q1 following the 65bp reduction in Bank Rate in March (Chart 2).
• The share of advances with interest rates less than 2% above Bank Rate fell by 12.1pp on the quarter, to 73.2%.
• Offsetting this, the share of advances with interest rates 2% or more, but less than 3%, above Bank Rate jumped 9.4pp to 19.1%. And the share of mortgages advanced with interest rates 3% or more above Bank Rate increased to 7.6%, the highest level since 2018 Q2.   

• The share of mortgages advanced in Q1 with loan to value (LTV) ratios exceeding 75% fell on the quarter to 38.0%, but remain 1.0pp higher than a year earlier (Chart 3).
• The share of gross mortgage lending in Q1 with LTV ratios exceeding 90% also decreased on the quarter, by 0.5pp, to 5.2%. 
• The share of mortgages advanced with LTVs over 95% was 0.3%, 0.1pp higher than the same period in the previous year.

The proportion of lending to borrowers with a high loan to income (LTI) ratio fell by 2.4pp on the quarter to 44.2% (Chart 4). Borrowers with high LTI are defined here as:

• Borrowers with single income who had a LTI ratio of 4 or above. These loans accounted for 10.9% of gross mortgage lending in Q1 2020, 0.4pp less than in the previous quarter.
• Borrowers with a joint income who had a LTI of 3 or above. These loans accounted for 33.3% of gross mortgage lending in Q1 2020, a 2.0pp decrease compared to the previous quarter.

• The share of gross mortgage advances for buy-to-let purposes (covering house purchase, remortgage and further advance) was 14.0% in 2020 Q1 (Chart 5), unchanged from the level seen in 2019 Q1. The share of advances to owner occupiers was 86.0%.
• Of the 86.0% of advances for owner occupiers, the share for remortgages was 32.1%, a decrease of 1.2pp since 2019 Q1. The share for house purchase was 47.0%, 0.9pp higher than 2019 Q1. Further advances and other mortgages (including lifetime mortgages) accounted for 6.9% of gross advances combined. 
• Of the 47.0% of advances for house purchases by owner occupiers, lending to first-time buyers was 0.6pp higher than in 2019 Q1, at 19.8% of gross advances. The share advanced to home movers was 0.3pp higher than a year earlier, at 27.2%.                    

• The value of outstanding 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) increased by 1.8% on the quarter, to £13.7 billion (Chart 6). 
• The proportion of total loan balances with arrears increased to 0.91%.