Value of mortgage advances tops £70bn as real estate experts say market is cooling off
Real estate experts have said the latest mortgage lenders statistics show a market cooling off from its earlier frenzy.
In figures published by the Bank of England on Tuesday, the outstanding value of all residential mortgage loans was £1,613.4bn at the end of the fourth quarter of 2021. This was 4.7 per cent higher than a year earlier.
The value of gross mortgage advances in this period was £70.2 bn, 8.4 per cent lower than in the fourth quarter of 2020. It was also the lowest level since the third quarter of 2020.
The value of new mortgage commitments was two per cent less than in the third quarter and 11.9 per cent less than a year earlier.
The share for house purchase for owner occupation was also down 10.9 percentage points from the fourth quarter of 2020.
Gareth Lewis, commercial director of property lender MT Finance, said a cooling of the market was “not surprising given the frenetic pace of activity over the previous 18 months.”
The mania seen in previous months was “not sustainable” and “with double-digit house-price growth pricing first-time buyers even further out of the market, a more reasonable pace, similar to pre-pandemic levels, is welcome,” Lewis added.
However, January and February were busy months when it came to lending with a “huge amount of positivity among buyers,” Lewis said.
In the event of a further increase in base rate and with big lenders hiking mortgage rates, borrowing costs are set to rise.
Lewis said: “This may see people clamour to get deals done sooner rather than later, focusing minds on low rates while they are still available, and mean a continuation of these positive figures.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the figures published on Tuesday were “historic” by now.
He added: “Borrowers must move quickly to secure a rate even though expectations of an interest rate rise at the Bank’s next meeting are being pared back given the Russia/Ukraine conflict and its direct and indirect effects on the UK economy.”