High loan-to-income lending tumbled to an eight-year low, while gross mortgage advances came in at their lowest for four years, data from the Bank of England shows.
Lending to borrowers with a high loan-to-income ratio was 39.7% of all loans in the first three months of the year, down by 3% from the previous quarter and 4.1% lower than a year ago.
This was the lowest since the first quarter of 2016, as institutions displayed a cautious approach to lending, according to the central bank’s latest Mortgage Lenders and Administrators Statistics.
The value of gross mortgage advances fell by 2.6% from the previous quarter to £51.6bn, the lowest since the second quarter of 2020, and was 12% lower than a year earlier.
The value of outstanding mortgage balances with arrears increased by 4.2% from the previous quarter, to £21.3bn, and was 44.5% higher than a year earlier.
However, the value of new mortgage commitments — lending agreed to be advanced in the coming months — jumped by 30.8% from the previous quarter to £60.1bn, up 31.2% on a year ago.
The share of gross mortgage advances for house purchase for owner occupation fell by 5.1% from the previous quarter to 54.6%, but was 4.3% higher than a year earlier.
The share of gross advances for owner-occupier remortgages rose 3.5% from the previous quarter to 31.8%, but remained 2.9% lower than a year ago.
The share of gross buy-to-let mortgage advances — covering house purchase, remortgage and further advances — rose by 1.2% from the previous quarter to 8.3%.
This was the first rise since the first quarter of 2022, but remains 1.6% lower than a year ago.
The outstanding value of all residential mortgage loans slipped by 0.1% from the previous quarter to £1.7trn, and was 1.4% lower than the year before.
Broadstone, director, risk Tom Cuppello says: “The continued increase in outstanding mortgage balances with arrears is a clear economic indicator that we are not out of the woods yet. It suggests that many UK households are still struggling with the cost-of-living crisis and spike in mortgage rates over the past two years.
“It is concerning that we have seen such a steep rise in those struggling to make their mortgage repayments as it paints a worrying picture of the nation’s personal finances following the recent squeeze on household budgets.”
