Homemover loans tumbled by 26% to 251,000 mortgages last year compared to the previous 12 months, the lowest level since 1974, data from UK Finance shows. 

It adds that one in five first-time buyers took out mortgages for terms of 35 years or more, compared to one in ten a year ago, as “significant affordability challenges” hit the market, says the banking trade body’s Household Finance Review Q4. 

The number of loans made to FTBs last year fell by 22.4% from 12 months ago, hitting their lowest level since 2013. 

It points out that among wider homemovers, “most of whom do not receive the same sort of help from family support or stamp duty exemptions” as FTBs, “were hit even harder” by higher interest rates and cost of living pressures. 

The report says: “Affordability pressure led to a weak mortgage market in 2023. The same pressures are likely to hold back activity in 2024, although forward data suggests some recovery in the first quarter.” 

“Over the whole of 2023, the increased cost of living, coupled with higher mortgage rates, led to a sharp fall in mortgage lending across all sectors.” 

On household savings, the report says: “Savings levels fell each month last year, for the first time in 25 years, as households raided their rainy-day funds to cover higher bills and expenditure. 

“But many households, particularly those without savings, will have needed to make cuts in their monthly spend.” 

However, the study adds: “The number of applications for mortgage loans rose in the fourth quarter of 2023. With inflation pressure easing, and expectations of lower borrowing costs to follow, the rise in applications signals that the market could grow in early 2024. 

UK Finance managing director of personal finance Eric Leenders says: “2023 was a tough year for UK households and we expect to see continued challenges in 2024. Affordability remains a barrier to homeownership, but pressures should start to ease gradually through this year and next.”