The outstanding value of all residential mortgage loans decreased by 0.1% from the previous quarter to £1,658bn and was 1.1% lower than a year earlier.

This is according to the FCA Mortgage Lending statistics for Q4 2023, which also showed the value of gross mortgage advances decreased by 13.4% from the previous quarter to £54bn and was 33.8% lower than a year earlier.

The lates figures also revealed that the value of new mortgage commitments (lending agreed to be advanced in the coming months) decreased by 6.6% from the previous quarter to £46bn and was 21.2% lower than a year earlier.

If the onset of the Covid-19 pandemic is excluded, this was the lowest figure since 2013 Q1.

Commenting on the FCA’s numbers Perenna chief executive Arjan Verbeek said: “Another significant year-on-year decline in both gross mortgage advances and new mortgage commitments – a sign of future lending – reflects how the market is not fit for purpose under the current restraints, nor suited to the needs of aspiring homeowners.

“Affordability is a major issue for home ownership, as most of the available mortgage options for borrowers, typically short-term fixes that revert to higher rates after two to five years, are pricing many aspiring first-time buyers out of the market. Our research shows that the painful experience of securing a mortgage is actually putting off two in five first-time buyers from pursuing homeownership”.

Verbeek suggested a lack of support from the Spring Budget last week with no other effective alternatives put on the table made it feel like the government had given up.

“If we want to see a healthy mortgage market which props up the UK economy, attracts new homeowners, and makes the prospect of owning a home an affordable reality, more needs to be done to restructure the market and provide workable alternatives, such as long-term fixed rate mortgages.”