New mortgage offers down 33pc in wake of mini-budget

The value of new mortgage commitments fell by a third in the fourth quarter of 2022, in the aftermath of September’s much-criticised mini-budget.

The latest Bank of England figures showed that new mortgage commitments came in at £58.4bn in the last three months of last year, a 33.5 per cent quarter-on-quarter drop and a 24.5 per cent year-on-year decline.

The central bank’s data also showed the value of mortgage advances fell by £4.3bn in the fourth quarter of 2022 compared with the previous quarter to £81.6bn.

While this was 16.3 per cent higher than in the same quarter for 2021, the bank said “if the onset of the Covid-19 pandemic and period immediately thereafter is excluded, this was the lowest observed since the first quarter of 2015”.

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During the quarter the share of mortgage advances with interest rates less than two per cent above Bank Rate was 93.6 per cent in the fourth quarter of 2022, 22 per cent higher than a year ago and the highest seen since the second quarter of 2008.

The figures also show that the proportion of lending to borrowers with a high loan to income (LTI) ratio decreased by 2.2 per cent to 49.3 per cent in the fourth quarter, the lowest seen since the third quarter of 2021.

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The value of outstanding balances with arrears increased for the first time since 2021, by 4.6 per cent over the quarter and 1.3 per cent over the year, to £13.6bn in the fourth quarter of 2022. This now accounts for 0.81 per cent of outstanding mortgages.

“The mortgage market chaos that followed the mini budget is plain to see in these figures,” said James Bawa, chief executive of digital property exchange platform Pexa UK. “With bond yields and interest rates rocketing, lenders were forced to radically reprice or pull products. This, coupled with the pressure from the cost of living crisis, demolished demand in the fourth quarter, although we did see a significant proportion of existing borrowers scramble to lock in rates before they climbed further.”

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