10 December 2024
If you are covering the latest FCA mortgage lending and mortgage charter statistics, please see the following comment from Holly Tomlinson, financial planner at Quilter:
"The latest data from the FCA show that the mortgage market is generally looking somewhat brighter, the mortgage charter has played a significant role in helping over a million people navigate significant challenges and higher interest rates over the last year.
"According to the data, the value of gross mortgage advances increased by 8.9% from the previous quarter to £65.5 billion, marking the highest new advances since the ill-fated mini budget, after which interest rates soared and market demand significantly dampened. This surge underscores renewed momentum in lending activity, likely bolstered by stabilising interest rates and improved buyer confidence. However, the value of new mortgage commitments, which reflect future lending agreements, fell slightly by 1.3% from the previous quarter, though they remain 34.2% higher than a year earlier, showing significant improvement over the year.
"Interestingly, the share of mortgage advances with loan-to-value (LTV) ratios above 90% rose to 6.6%, the highest since 2008, reflecting increased risk-taking as lenders seek to attract buyers with smaller deposits. Some might worry about the correlation with the financial crisis however lending criteria is much stricter than it was then with stress testing rules dictating customers can afford their mortgages even in a volatile interest rate environment. Conversely, remortgaging activity dropped to 22.8%, down from the previous quarter, as many homeowners have already locked in deals during the earlier rate-hiking cycle.
"On arrears, the picture is mixed. New arrears cases as a proportion of outstanding balances decreased from the previous quarter but remain higher than a year ago. The total value of mortgage balances in arrears also dipped slightly but is still up 17.5% compared to the same time last year, suggesting that while immediate pressures may have eased for some, financial challenges persist for others.
"The data on the Mortgage Charter is interesting, with around 1.7 million mortgages benefiting from the flexibility options introduced. Measures such as temporary payment reductions and interest-only terms have helped 214,000 borrowers manage their repayments.
"However, it remains unclear whether many of the people who benefited from the Charter might have done so regardless, as some of the measures are typically adopted throughout the industry as standard practice. For example, 1,738,489 people with mortgages approaching the end of a fixed-rate deal locked into a new deal up to six months ahead of maturity. This is typically standard practice and makes up the majority of those who have benefited.
"Similarly, 410,345 people with mortgages locked into a new deal up to six months ahead of maturity, before the start of the new deal, locked into an alternative deal.
"What is clear from this data is that while things are improving in the property market, we are not quite out of the woods yet and those remortgaging in the new year might be in for a nasty shock."
