The Bank of England has reported that during the third quarter of 2018, the outstanding value of all residential mortgage loans continued to increase to £1,430 billion, 3.2% higher than a year ago.
Meanwhile, the value of gross mortgage advances grew 3.7% in the year to 2018 Q3, to £73.5 billion. This was the highest level since 2007 Q4.
New mortgage commitments (new lending that lenders have agreed to advance in coming months) were 4.7% higher than a year ago.
In addition, the share of new lending for buy-to-let purposes declined to 12% in Q3, its lowest since 2012 Q4.
However, the share of new lending to first-time buyers remained steady at 21%.
Remortgaging, as a proportion of new lending, is two percentage points higher than a year ago. However, it decreased marginally on the quarter to 30%.
The proportion of high loan-to-income (LTI) lending (loans above four times the value of annual income for a single buyer or above three times the annual income for joint buyers) has increased 1.8 percentage points this quarter to 47%. The share of loans with a loan-to-value (LTV) ratio exceeding 90% also increased, to 4.3%.
The value of outstanding mortgage balances with some arrears increased for the first time since 2016 Q2 to £14.5 billion, compared to £14.3 billion in 2018 Q2. These balances still account for only 1% of the total.
Keith Haggart, managing director at lifetime mortgage provider Responsible Lending, said: “It’s less a case of what’s changed, more a case of what hasn’t. Britons have shrugged off political uncertainty and are borrowing more than at any time since before the financial crisis.
“In fact the growth of new mortgage commitments for the coming months is still vastly outstripping house price growth nationally.
“Favourable borrowing conditions, tax breaks and a desire to buy for the long-term, has blunted the sword of any concerns surrounding Brexit and buyers are still on the march.
“The only thing noticeable by its absence is a jump in the proportion of borrowing by first-time buyers, which doesn’t appear to have shifted since Stamp Duty tax breaks were introduced. This will only fuel fears the tax break ends up in the pockets of sellers and developers. However, first-time buyers are continuing to benefit from the exit from the market of many landlords, which sent buy-to-let borrowing to a five-year low.”