Gross mortgage advances and the value of new mortgage commitments in Q3 2021 both fell on the quarter, statistics from the Bank of England (BoE) show.

The bank says that the value of gross mortgage advances in the third quarter of this year came to £73.4bn, which compares to £89bn in Q2.

However, this is up significantly on an annual basis – in Q3 2020, this value stood at £62.5bn.

Meanwhile, the value of new mortgage commitments came to £78.9bn in Q3 2021 – again, a fall in the short term – in Q2 this came to £85.9bn – but annually unchanged, with the bank giving a Q2 reading of £78.9bn.

The BoE says that the outstanding value of all residential mortgages loans at the end of this quarter grew 4.9%, coming to £1.6tn.

On an annual basis, the report shows that the segment of borrowers on a low interest rate is fallen considerably. In Q3 2020, 74.2% of gross advances were less than 2% above the bank rate. This has since slipped to just over 57.3%.

And the proportion on a rate 3% to 3.99% above the bank rate has grown across the year, from 1.9% in Q3 2020 to 2.9% in Q3 2021.

Regarding arrears, the value of outstanding balances with arrears fell to the lowest it has been since Q1 2020, £13.8bn, with the proportion of total loan balances with arrears now coming to 0.86%.

Hargraves Lansdown senior personal finance analyst Sarah Coles comments: “The mortgage market is cooling, but there’s nothing to chill the blood in these figures.

“The temperature dropped in the mortgage market this autumn, after the stamp duty holiday became decidedly less generous. Mortgages agreed for the winter fell too.

“However, they were dropping back from unusually high levels, which kicked in during the heat of the stamp duty holiday this summer, so a drop was always expected. And although mortgages agreed for the coming months fell, they remained at a similar level as the same period in 2020.

“We also saw the rise of remortgaging as a percentage of all mortgages, for the first time since the first three months of the pandemic. Much of this will be simply a function of the drop in the number of mortgages for new homes.

“However, during this period, inflation rose above its 2% target, and while we didn’t see rampant interest rate speculation until a little later, there were early stirrings of unease, which may well have convinced homeowners that now was the time to lock in a low rate.

“We can expect the mortgage market to grow colder this winter, and demand to drop further, as a result of the combination of the final end date for the stamp duty holiday, and the usual seasonal slowdown.

“However, it’s not going to freeze over. We can expect remortgage numbers to climb, and mortgages for purchases to hold up reasonably well. Despite some recent rises, mortgage rates are still incredibly low, and with lockdown savings burning a hole in some people’s pockets, there are still compelling reasons to buy.”