Data shows that the outstanding value of all residential mortgage loans was £1,601.2 billion at the end of Q3, 4.9% higher than a year earlier
The value of gross mortgage advances totalled £73.4 billion in Q3, £15.6 billion lower than the previous quarter but 17.4% higher than the amount seen in Q3 2020, according to the latest Mortgage Lenders and Administrators Statistics from the Bank of England.
The Mortgage Lenders and Administrators Return (MLAR) is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.
The data shows that the outstanding value of all residential mortgage loans was £1,601.2 billion at the end of Q3, 4.9% higher than a year earlier. The value of new mortgage commitments (lending agreed to be advanced in the coming months) was 8.2% less than the previous quarter but broadly unchanged from a year earlier, at £78.9 billion.
The share of mortgages advanced with loan-to-value (LTV) ratios exceeding 90% was 4.2%, 0.6pp higher than a year earlier and a 2.1pp increase compared to the previous quarter.
The value of outstanding balances with some arrears decreased by 3.4% over the quarter to £13.8 billion, and now accounts for 0.86% of outstanding mortgage balances.
Karen Noye, mortgage expert at Quilter, commented: The property market has been incredibly hot in 2021 but the latest set of mortgage statistics from the Bank of England show that the temperature is finally reducing as the value of gross mortgage advances in Q3 is £15.6bn lower than Q2. However, this still is an eyewatering 17% higher than last year. Similarly, the value of new mortgage commitments was 8.2% less than the previous quarter illustrating that some sense of normality is returning to the market.
While this should mean that house prices start to decrease, news yesterday from the Bank of England might mean house prices soar even higher. The Bank of England confirmed that they were going to consult on whether the time is right to withdraw its affordability rules which dictate how lenders assess whether borrowers could continue to afford their mortgage if their mortgage interest rate increased to 3% above their Standard Variable Rate, Noye said.
Noye said: The thinking is that this would help first-time buyers who are stopped from getting on the housing ladder by significant house price increases due to the stamp duty holiday, the race for space and a proliferation of cheap mortgage deals. While this would help first-time buyers borrow more it may not go to the root of the problem which is to do with wage growth failing to keep up with ever increasing house prices. First-time buyers are simply struggling to raise a big enough deposit to get on the housing ladder as the cost-of-living skyrockets due to inflation.