The value of gross mortgage advances increased by almost 37% quarter-on-quarter in Q3 to £80.4bn, the largest increase in new advances since Q3 2020, the Bank of England (BoE) has revealed.
The central bank’s latest Mortgage Lenders and Administrators Statistics report found that the value of new mortgage commitments increased by 1.6% quarter-on-quarter to £79.4bn, which is the highest value since Q3 2022.
This figure also jumped by 20.3% year-on-year.
The BoE revealed that the outstanding value of all residential mortgages jumped by 0.9% quarterly to just over £1.73bn, while also increasing 2.9% year-on-year.
While the share of gross mortgage advances for house purchases increased by 2.5 percentage points from the previous quarter to 58.6%, this remained 5.8 percentage points lower than the year previous.
Furthermore, the share of gross advances for remortgages dropped by 0.4 percentage points quarter-on-quarter to 28.6%, but increased yearly by 5.8 percentage points.
The values of outstanding mortgage balances with arrears also fell in the third quarter by 2.9% quarterly and 5.8% year-on-year to £20.6bn.
Chief sales and marketing officer at Phoebus Software, Richard Pike, said that while the market has shown strength in the past quarter, this resilience may be affected in the final quarter.
He concluded: “These figures demonstrate the mortgage market was in rude health over the summer, with overall lending up for the seventh consecutive quarter. Gross advances saw the largest quarterly increase for five years as borrowers took advantage of falling rates following the BoE’s base rate cut in August. New mortgage commitments were also at their highest since Q3 2020, showing a strong pipeline for lenders for the rest of the year.
“The fact that arrears rates are continuing to fall suggests that lenders are getting the balance right here, and demonstrates the resilience of households in the face of cost-of-living pressures.
“It will be interesting to see next quarter’s figures when we’ll see how the uncertainty leading up to the Budget affected borrower behaviour.”
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