12 September 2023
If you are covering the Mortgage Lenders and Administrators statistics for Q2 2023, please see the following comment from Karen Noye, mortgage expert at Quilter:
"This morning’s Q2 mortgage data from the Bank of England paints a multifaceted picture for the housing market. At the close of Q2 2023, the outstanding value of all residential mortgage loans stood at a £1,655.5 billion. This is a 0.4% increase from the previous year. However, what is strikingly evident is the significant decline from the last quarter, marking the most substantial quarterly decrease since records began in 2007. Such a shift underscores the deepening concerns, as highlighted by recent house price indices, about the UK's property market and its ongoing health.
"Furthermore, the gross mortgage advances in Q2 2023 totalled £52.4 billion. This figure is £6.3 billion less than the previous quarter and a sharp 32.8% drop from Q2 2022. The substantial downturn in advances is symptomatic of the overarching challenges faced by the housing sector, particularly in light of the rising borrowing costs and broader economic pressures that are turning people off from entering the property market.
"Yet, amidst these challenges, a glimmer of hope emerges. New mortgage commitments for Q2 2023, which signify lending that is agreed to be advanced in the upcoming months, surged by 26.2% from the previous quarter, reaching £61.7 billion. Even though this figure is still 26.6% lower than the same time a year ago, it stands as the first increase and the highest value since Q3 2022. This suggests that while the housing market is under strain, the inherent human drive for homeownership might be influencing a potential rebound.
"The data further reveals a shift in the purpose of borrowing. In Q2 2023, 54.0% of gross advances were for house purchases for owner occupation, a rise from both the previous quarter and year. Gross advances for remortgages for owner occupation constituted 32.0%, which was higher than Q2 2022 but lower than the previous quarter. Notably, borrowing for buy-to-let purposes fell to its lowest since Q4 2010, at just 8.1%.
"This data suggests that there is an exodus of landlords from the property market as the tightening of tax laws on Buy to Lets make them a more unattractive investment. Coupled with this the continuing high property values but simultaneous threat of a property price crash is seemingly making more landlords opt to stay out of the market. How this ultimately impacts the market for all prospective buyers and renters is yet to be seen. Currently property prices are slipping slowly but rent remains sky high as renters compete for a dwindling stock of rental properties."
