Gross mortgage lending dipped for the first time in almost a decade last year, annual figures from UK Finance have shown.

Although the drop from £268.7bn in 2018 to £267.6bn in 2019 was only 0.4 per cent, it was the first annual decline since 2010.

The total number of mortgage advanced over the year, excluding internal product transfers was down by nearly 2 per cent to 1.39m.

First-time buyer numbers were down by 0.6 per cent year on year to 351,000 after reaching a 10-year peak of 353,000 in 2018.

Behind the headline figure there were declines in first-time buyer numbers across all UK regions apart from Yorkshire and the Humber and the West Midlands, with the most pronounced reductions in the South.

Home mover numbers were 2 per cent lower in 2019 at 344,000 and purchases mortgages for landlords were down by 3.2 per cent to 69,900.

Residential remortgages fell by 2.3 per cent to 445,900, landlord remortgages were 1 per cent lower at 177,100, but internal product switches were 1.4 per cent higher at nearly 1.2m.

Income multiples at record highs

For all home purchase mortgages, income multiples reached record highs, but they are rising particularly fast for home movers.

In Q4 2019 the average multiple for movers was 3.32 times income, which was 10 per cent higher than the pre-crisis peak in 2007.

Negative equity stalks Northern Irish market

House prices across the UK as a whole are now 17 per cent higher than their previous peak in Q4 2007. 

But in Northern Ireland they remain 37 per cent below the level they reached before the bubble burst.

This has left an estimated 9 per cent of borrowers with equity levels below 10 per cent and almost 5 per cent in negative equity.

This compares to 3 per cent of UK borrowers with low equity and only 0.25 per cent in negative equity.

Shrinking remortgage sector

UK Finance noted that the prevalence of five-year fixed rates was starting to curb remortgage activity, although the drop in external switching was more than offset by the increase in product transfers.

However, it expects the trend to continue to constrain remortgaging in 2020.

It highlighted a significant fall in the number of borrowers on standard variable rates which has almost halved from 2.4m in 2015 to 1.3m at the end of last year.

The trade body puts this down to lenders taking a more proactive approach by offering customers new deals.

UK Finance managing director Eric Leenders says: “Last year saw a slight fall in levels of mortgage activity for home purchases, largely driven by increasing affordability pressures. 

“Meanwhile the remortgage market remains competitive, although the shrinking number of customers coming to the end of their fixed rate deals will start to impact volumes in this segment.”

Private Finance director Shaun Church says: “The fact that first-time buyer numbers fell in all but two English regions last year is a timely reminder for the new Chancellor ahead of his Budget debut next week that the foundations of the property market still need some care and attention.

“Too many people are facing an upwards challenge to upsize, or a downsizing dilemma whereby the sums of money involved can make it difficult to see whether it’s even worth exploring a move.

“After years of watching an increasingly clogged-up market, it’s high time for another round of surgery to stamp duty rules to make moving more practical at both ends of the housing ladder.”