New mortgage lending at a 10-year high as BTL slowdown continues
NEW mortgage lending reached its highest level since 2008 in the second quarter, statistics from the Bank of England reveal.
New commitments increased by 19.8 per cent from the first quarter to £72.2bn, while total gross advances increased by 6.4 per cent year-on-year to £66.7bn.
The outstanding value of all residential loans continued to increase to £1,417.2bn, 3.8 per cent higher than a year ago.
The proportion of high loan-to-income lending – for loans above four times a single buyer’s annual income or above three times joint buyers’ annual income – also increased.
Read more: Bank warns on higher-risk mortgage lending
On the flipside, re-mortgaging as a proportion of new lending declined by two percentage points from the previous quarter and now accounts for 30.8 per cent of new lending.
The share of buy-to-let (BTL) lending also declined from the first quarter, accounting for just 13.1 per cent of new lending.
The proportion of first-time buyers increased by 1.8 percentage points to 21.4 per cent.
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Ross Boyd, founder of mortgage platform Dashly.com, said the figures suggest borrowers shrugged off Brexit-related uncertainty over the summer with a resurgent risk appetite.
“But where homeowners tread, landlords are continuing to choose not to follow,” he said. “For investors it’s more of the same, with the decline in BTL lending since the first quarter firmly against the run of play. It’s yet more evidence of a slowdown precipitated by hostile tax changes in recent years that have left landlords licking their wounds.”
Read more: Landlords split over future of traditional buy-to-let
The proportion of total loans in arrears continued to fall, with the outstanding balance in arrears now £14.3bn compared with £14.8bn in the first quarter. Boyd suggested this is another sign of consumer confidence “even if it’s not totally surprising with rates still on the floor by historic standards.”
