Q2 lending a third lower than last year

The value of gross mortgage advances was 33.3% lower in Q2 2020 than in Q2 2019, according to the Bank of England’s Mortgage Lenders and Administrators Return (MLAR) data.

April to June this year saw mortgage advances of £44.1 billion, a third lower than the same three months last year – and the value of new mortgage commitments was 53.2% lower at £34.3 billion.

Buy to let took a slightly larger share of mortgage lending, up 1.2% from Q2 last year – while lending above 90% LTV unsurprisingly dropped by 0.6% to 4.9% of mortgages advanced.

The Mortgage Lenders and Administrators Return is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.

Rob Barnard, Director of Intermediaries at Masthaven said, “The second quarter of the year saw a dramatic downturn in lending activities as a result of the COVID-19 pandemic, subsequent lockdown and closure of the housing market.

“The good news, however, is that the mortgage market is already showing the green shoots of recovery. Government initiatives such as the Stamp Duty holiday and extension of the Help to Buy equity loan scheme certainly helped to bolster demand amongst potential borrowers, and brokers also seem to be optimistic about the sector’s recovery. In fact, 71% of intermediaries said they feel confident about the market’s longer-term prospects, according to our recent broker survey.

“The mortgage and short-term lending sectors have proven to be remarkably resilient over the past few months, adapting the new circumstances and ensuring they remain open for business. The release of pent-up demand post-lockdown should help to bring activity levels back on track over the coming months, with a surge in non-traditional borrowers giving brokers new opportunities to work with specialist lenders to serve this expanding market.”