The value of gross mortgage advances in the second quarter of 2021 came to £89bn, more than double Q2 2020’s figure, a new quarterly report from the Bank of England shows.
This is the highest level recorded since the third quarter of 2007, the report adds.
At the same time, the value of new mortgage commitments hit £85.6bn, which is two-and-a-half times more than a year ago but, the bank points out, £2.1bn lower than the peak seen in the final quarter of last year.
The report also shows that the value of outstanding residential mortgage loans grew 4.6% from Q2 2020, at £1.58tn.
Changes to mortgage criteria can be seen in the data that shows the proportion of borrowers with a high loan-to-income ratio increasing by 1.9% between Q1 2021 and Q2 2021, or 8.3% between Q2 2020 and the second quarter of this year.
And the share of advances with 90% LTV ratios and above increase by 0.9% to make up 2% of advances over the quarter – although this is 2.8% lower than recorded in the second quarter of last year.
Meanwhile, the BoE data shows that 0.89% of outstanding mortgage balances now have some arrears, having fallen from 0.96% over the quarter.
The value of outstanding arrears dropped 6.3% over the same time frame to £14.1bn.
Target Group business development director Mark Gilliver comments: ”
release: “Throughout the pandemic, the mortgage market has been in a state of fluctuation, initially seeing a drop in demand during the first lockdown, but then experiencing a boom in demand thanks to the stamp duty holiday initiative.
“However, the Q2 results could be seen as outliers, as we are unlikely to see such a rush again for a while. With inflationary pressures and the threat of increased interest rates not far off, the next quarter could well tell a very different story.
“This could be a sign that the phase of bigger mortgages is on its way out now that the UK has reopened and spending on non-essentials items is reintroduced into the public’s budgets.
“The truth of the matter is the housing market isn’t out of the woods yet, and lenders now need to be ready for rate rises, and how this will affect repayments.”
