The value of agreed mortgages set to be handed out over the coming months jumped to their highest level in 14 years, according to the Bank of England.
New mortgage commitments in the fourth quarter of last year lifted by 24.2 per cent to £87.7bn, the highest since the third quarter of 2007, according to the Bank’s Mortgage Lenders and Administrators quarterly statistics.
The jump is driven by buyers keen to beat the expected stamp duty increase in March.
Earlier this week, residential mortgages purchases in December hit 77,180 loans, a 31 per cent increase of from 59,100 in the same period a year ago, according to UK Finance.
However, the chancellor in his Budget last week granted industry calls and extended the stamp duty holiday on properties for sale up to a threshold of £500,000 until 30 June.
Twenty7Tec director Phil Bailey says: “Bank of England figures clearly showing the ongoing demand and need for mortgages in the UK. Broker activity in 2021 is already reaching new highs over the previous year, even prior to the pandemic.
“The growing number of available mortgage products in the market is also showing the increased confidence lenders have, reaching their highest level since pre-covid. We expect this appetite and increased demand to continue as buyers, home movers and even lenders look for one more chance to benefit from the stamp duty reduction.”
However, the share of mortgages advanced in the final quarter of last year with loan-to-value ratios over 90 per cent was 1.2 per cent, 4.5 percentage points lower than a year earlier and the lowest level since these records began in 2007, according to the Bank.
To address this, the chancellor also launched the mortgage guarantee scheme in the Budget, which will see the government underwriting 95 per cent mortgages for buyers with 5 per cent deposits.
The government’s £3.9bn move is backed by several of the UK’s largest lenders such as Lloyds, NatWest, Santander, HSBC and Barclays and launches next month.
Today’s Bank data also reports that outstanding mortgage balances with arrears rose by 3.4 per cent over the quarter of last year to £14.3bn, and now accounts for 0.93 per cent of total outstanding mortgage balances.
