13 June 2023
If you are covering the Mortgage Lenders and Administrators Statistics Q1 2023, please see the following comment from Karen Noye, mortgage expert at Quilter:
"This morning’s mortgage statistics paint a worrying picture with more people finding it hard to pay off their mortgages and less people taking out mortgages in the first place. The net impact of this will inevitably be felt in house prices which have already tumbled over the past few months. If repossessions start to increase and the market becomes flooded during a period where demand is lacking it will have a damaging impact on house prices.
"The value of new mortgage commitments, which essentially means lending agreed to be advanced in the coming months in 2023 Q1 was a huge 40.7% less than a year earlier, at £48.9 billion. This was also the lowest observed since 2020 when lending ground to a halt as the nation adjusting to the new conditions of lockdown.
"Unfortunately, the value of outstanding balances with arrears also increased by 9.5% over the quarter and 12.5% over the year, to £14.9 billion in 2023 Q1. This now accounts for almost 1% of all mortgage balances. This shows the ugly impact of the cost of living crisis which is pushing budgets to the very limit and sometimes over.
"Sadly, the picture is likely only set to get worse in the short term as once again the mortgage market has gone through a very turbulent period over the last week with rates getting ever more expensive piling even more pressure on already stretched budgets. The withdrawal of mortgage products and increasing rates by lenders over the past few weeks have been driven by a number of factors. The prevailing reason for this shift is the higher-than-expected inflation rate of 8.7% in April fuelling predictions that the Bank of England will raise interest rates to a higher level than previously thought. This fear has made some of the big name lenders cautious and prompted them to withdraw products and then raise their rates to safeguard against future losses.
"Before these recent developments, the sector was seemingly in a stable state since the spike in rates around November of last year. This stability was likely due to the economic outlook looking more predictable with interest rates set to peak at around 5%. But the higher than expected CPI figures and particularly the core inflation figures once again set the market off course again. The revised interest rate peaks of 5.5% sent many banks and building societies into a bit of a frenzy again. It is still nothing like after the mini-budget but it is not exactly what the market needs right now considering house prices are continuing to drop.
"For those in the process of trying to secure a mortgage it’s important to move as quickly as you can. While it is likely too late now to avoid any of the recent increases making sure you provide your lender or mortgage broker with all the required financial information enables you lock into a deal and ensure you don’t end up paying a higher rate. That said, a mortgage broker still will be able to search out the best deal for you as they have an intimate knowledge of the market. Unfortunately, for those about to remortgage they are in for a nasty shock. Making a budget and finding ways to save money in other areas is key to help soften the blow of an inevitably higher monthly mortgage bill."
