The value of new mortgage commitments in the final quarter of 2022 stood at £58.4bn, says the Bank of England (BoE) in its new Mortgage Lenders and Administrators Statistics report.
This marked a 33.5% fall on Q3 2022, when this value stood at £87.8bn and presents a 24.5% drop compared to a year previous (£77.3bn).
The BoE says that, excluding data from the Covid-19 period, this is the lowest level for this metric witnessed since the first quarter of 2015.
Meanwhile, the value of gross mortgage advances in Q4 2022 was £81.6bn, which compares to £85.9bn in the quarter previous.
However, while this number fell on the quarter, it was 16.3% more than seen in Q4 2021, when the value of gross mortgage advances came to £70.2bn.
And the outstanding value of all residential mortgage loans as 2022 came to a close was £1.68tn – 3.9% more than in Q4 2021.
Within gross mortgage lending, of the 88.1% that went to owner occupiers, the share for remortgages was 27.3% in Q4 2022, a climb of 2.4% on the quarter but 0.8% lower than seen in Q4 2021.
“This may well be because borrowers didn’t know which way to go when the economy was looking so fragile in the last quarter of 2022,” says Phoebus Software chief revenue officer Adam Oldfield.
He continues: “It looks as though was a significant proportion of people that let their fixed rates move onto SVRs with their current lenders, waiting to see what will happen to interest rates before fixing again.”
The BoE data also shows that the value of outstanding balances with arrears grew for the first time since the first quarter of 2021.
This value increased by 4.6% compared to Q3 2022 and 1.3% on the year before, to £13.6bn.
And the proportion of total loan balances with arrears went up for the first time since Q1 2021, from 0.78% – an historical low – to 0.81%.
Oldfield adds: “The fact that new mortgage commitments was down will come as no surprise to anyone but, given the number of people coming off fixed rate deals it is a little surprising to see that remortgaging was also down.
“Arrears, although up, are still at very low levels. We could see this picture change in the coming months if predictions from Fitch last week play out. Nevertheless, even if the increase is to 1.5% over the course of this year, it will be to more normal levels, rather than alarming levels.
“Affordability will be something that lenders will have to manage tightly for new borrowers, and for those coming off low fixed rates onto higher interest than they have previously been unused to coping with.
“This is especially true when we see that the number of 90% LTV mortgages is increasing.”
