14 March 2023
If you are covering the Bank of England mortgage lending statistics, please see the following comment from Charlotte Nixon, mortgage expert at Quilter:
"New figures from the Bank of England show new mortgage commitments dropped off a cliff towards the end of last year as the country reeled from the damage of the mini budget.
"The value of new mortgage commitments (lending agreed to be advanced in the coming months) in 2022 Q4 was 33.5% less than the previous quarter and 24.5% less than a year earlier, at £58.4 billion. If the onset of the Covid-19 pandemic and period immediately thereafter is excluded, this was the lowest observed since 2015.
"However, the period leading to up to Christmas was rife with uncertainty and while the country is still not out of the woods and still suffering with the impact of higher interest rates and high inflation the direction of travel does at least look less unpredictable. After the troubling days following the mini budget, mortgage rates have dropped faster than originally anticipated and therefore there is a chance that this will help encourage more people to market and more people will be seeking a mortgage. As lenders take part in a race to encourage more people to market, we are seeing rates somewhat stabilise as they compete for custom. For anyone looking to move at the moment it is important to seek mortgage advice as they can look at the whole of market and get the best possible deal which is important in this type of environment.
"The knock-on impact of so many people shunning the property market is that we have seen house prices soften over the past few months. However, as of yet many sellers are unwilling to drop prices too far but if demand continues to be depressed sellers will have no option but to drop prices further if they are to achieve a sale.
"Sadly, the results also show that the cost-of-living crisis is starting to force people to go into arrears. The value of outstanding balances with arrears increased for the first time since 2021 Q1, by 4.6% on the quarter and 1.3% on a year earlier, to £13.6 billion.
"The FCA last week revealed a suite of guidance for lenders with customers that are struggling to keep up with payments. This is largely around offering customers forbearance options. Forbearance refers to a temporary agreement between a lender and a borrower in which the lender allows the borrower to temporarily reduce or pause their payments on a loan. Forbearance may be granted for various reasons such as financial hardship, illness, or other unexpected circumstances that may prevent the borrower from making their regular loan payments. This might include putting a customer on an interest only mortgage for a period of time to reduce their monthly payments."
