BoE: Lending to FTBs highest since reporting began, these ‘buyers are pushing themselves to the max’

The Bank of England has just published its quarterly Mortgage Lenders and Administrators Statistics 2024 Q4 report showing lots of interesting data regarding advances, share of lending to FTBs — at a record high — and lending to borrowers at high LTIs, below.

Newspage asked brokers for their views.

The outstanding value of all residential mortgage loans increased by 0.5% from the previous quarter to £1,678.2 billion, the highest stock of outstanding mortgage loans since reporting began in 2007 and was 1.3% higher than a year earlier.

The value of gross mortgage advances increased by 4.9% from the previous quarter to £68.8 billion, the highest new advances since 2022 Q4, and was 29.9% higher than a year earlier.

The share of lending to first time buyers increased by 0.3pp from the previous quarter to 29.6%, the highest share since reporting began in 2007, and was 1.9pp higher than a year earlier.

The proportion of lending to borrowers with a high loan to income (LTI) ratio increased by 0.5 pp from the previous quarter to 45.8%, the highest since 2022 Q4, and was 3.1pp higher than a year earlier.

The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 4.9% from the previous quarter to £69.3 billion, the highest since 2022 Q3, and was 50.7% higher than a year earlier.

The share of gross mortgage advances for house purchase for owner occupation decreased by 0.8pp from the previous quarter to 63.7% but was 3.9pp higher than a year earlier.

The share of gross advances for remortgages for owner occupation increased by 0.7pp from the previous quarter to 23.5% but was 4.8pp lower than a year earlier.

New arrears cases (as a proportion of total outstanding balances with arrears) increased by 2.3pp from the previous quarter to 12.0% but remained 1.5pp lower than a year earlier.

The value of outstanding mortgage balances with arrears increased by 1.3% from the previous quarter to £22.1 billion and was 8.4% higher than a year earlier. The proportion of the total mortgage loan balances with arrears, relative to all outstanding mortgage balances, has stayed the same as the previous quarter at 1.3%, and was 0.1pp higher than a year earlier.

Tony Redondo, founder at Cosmos Currency Exchange said, “Today’s Bank of England’s Q4 2024 Mortgage Lenders and Administrators Statistics read like a set of traffic lights.

“Green for a booming UK mortgage market with the total value of residential loans hitting a record since 2007 with gross advances at their highest level since Q4 of 2022.

“First-time buyers are driving demand with a record 29.6% share. Amber for soaring new commitments, up over 50%, and a big shiny red light for a 45.8% increase in high loan-to-income lending, the most since Q4 of 2022, signalling stretched affordability amid current mortgage rates and new mortgage arrears cases spiked to 12%.

“Is this a surge in confidence or a sign of job insecurity, concerns about the April tax rises, the economic headwinds, and a global trade war? FTBs and high-LTI borrowers could face increasing pressure if interest rates rise or economic growth falters.”

Mark Eaton, COO at April Mortgages said, “Mortgage lending surged in the final quarter of last year as borrowers rushed to beat April’s stamp duty deadline.

“Mortgage advances reached a two-year high, with the share of lending to first-time buyers hitting new heights.

“However, with house prices soaring borrowers are increasingly reliant on high loan-to-income ratios to overcome affordability pressures.
There are also clear signs of mortgage stress with the total value of arrears spiking 8% in the last 12 months.

“Urgent action is needed to tackle the current affordability crisis in the UK housing market and ease the burden on hard-pressed households.
We need to make it easier for responsible borrowers to access larger loan sizes and provide more tailored financial support to homebuyers.

“If homeowners are worried about their mortgage repayments they should speak to their lender as soon as possible as there may be ways they can support you.”