The Bank of England has reported that the outstanding value of all residential mortgage loans was £1,630.5 billion at the end of 2022 Q1, 4.4% higher than a year earlier.
The value of gross mortgage advances in the first quarter was £76.9 billion, £6.7 billion greater than the previous quarter, but 7.5% lower than in the same period in the previous year.
The value of new mortgage commitments (lending agreed to be advanced in the coming months) in 2022 Q1 was 6.7% greater than the previous quarter and 6.6% greater than a year earlier, at £82.5 billion.
Meanwhile, the share of gross advances with interest rates less than 2% above Bank Rate was 85.5% in 2022 Q1, 26.5 percentage points (pp) higher than a year ago, and the highest seen since 2008 Q3. The increase was mostly driven by the 50 basis points (bp) increase in Bank Rate across the quarter, rather than any significant change in mortgage interest rates.
In addition, the share of mortgages advanced in 2022 Q1 with loan to value (LTV) ratios exceeding 90% was 3.9%, 2.8pp higher than a year earlier but a 0.2pp decrease compared to the previous quarter. The share for house purchase for owner occupation was 50.7%, down 2.3pp on the previous quarter, and down 13.4pp from 2021 Q1. The share of gross advances for remortgages for owner occupation was 29.0%, an increase of 11.0pp since 2021 Q1, and an increase of 0.8pp since 2021 Q4.
The value of outstanding balances with arrears decreased by 1.1% over the quarter and 11.3% over the year, to £13.3 billion in 2022 Q1, and now accounts for 0.82% of outstanding mortgage balances, the lowest since recording began in 2007.
Karen Noye, mortgage spokesperson at Quilter, said: “The Bank of England’s latest mortgage lenders and administrators statistics show the property market continued to move at a rapid pace in Q1 of this year, though this is unlikely to last. By the end of Q1 2022, the outstanding value of all residential mortgage loans was £1,630.5 billion – 4.4% higher than the previous year.
“The data show that the value of gross mortgage advances reached £76.9 billion – up £6.7 billion on the previous quarter. However, as the data from the previous quarter included the cooling off period following the final withdrawal of the stamp duty holiday, this growth is not unexpected. Mortgage lending in Q1 2022 was 7.5% lower compared to the same period a year earlier, which suggests the rush to buy is finally slowing.
“The value of new mortgage commitments also grew considerably in Q1 2022 to £82.5 billion, up 6.7% on the previous quarter and 6.6% compared to the previous year. Given this data is from Q1 alone, this is likely as a result of people pushing to buy while the Bank of England interest rates were still relatively low and cheap mortgage deals were still on the shelves.
“As circumstances have changed significantly since Q1, the Bank Rate has crept higher and cheap mortgage deals have largely become a thing of the past, we can expect to see a considerable cooling off in terms of lending in the following months. This will likely be seen across the board, but first time buyers in particular, who were already struggling to take their first step on the property ladder, will find it harder still as their spending power will reduce as their deposits are eroded by inflation.
“Throughout the rest of the year, we are likely to see mortgage lending drop as more people are priced out of the market by the rising cost of living and BoE interest rate hikes, as well as being put off by the continuing economic uncertainty.”