The share of new lending for buy-to-let (BTL) purposes declined to 12% in the third quarter of 2018, its lowest record level since Q4 2012, while the value of residential mortgage loans continued to increase, new data has revealed.
The Mortgage Lenders and Administrators Statistics: 2018 Q3 published by the Bank of England (BoE) today found that the value of residential mortgage loans has continued to grow over the year, standing at £1,430bn in the last quarter, 3.2% higher than a year ago.
Furthermore, the value of gross mortgage advances expanded by 3.7% in the year to Q3, rising to £73.5bn. This is the highest statistic recorded by the BoE since the fourth quarter of 2007.
The share of new lending to first-time buyers remained steady during Q3, with the new homeowners accounting for 21% of those who took out a mortgage in the period.
As a proportion of new lending, remortgaging was up by 2% when compared to last year. However, it marginally dropped to 30% on a quarterly basis.
For the first time since Q2 2016, the value of outstanding mortgage balances with some arrears increased to £14.5bn, compared to £14.3bn in Q2 2018. However, these balances still only account for just 1% of the total.
Commenting on the arrears statistic, Spicerhaart corporate sales managing director Mark Pilling said: “With the recent rate rises, I had predicted we would start to see arrears rise again, and I fear this could be the start of a more permanent shift. Consumers racked up a record £17.1billion of credit card debt in October, 11.6% higher than a year earlier, and October is not usually a month associated with big spending.
“There are growing concerns that many people are now relying on credit cards for everyday purchases, and while many in this situation are able to keep their heads above water now, if there is another rate rise, payment shock coming off a fixed rate deal or rise in the cost of living, many people may struggle to make their monthly mortgage payments or rent – which in turn will impact landlords and where appropriate their ability to make mortgage payments.”
Pilling concluded that “repossession should always be the last resort and lenders should always look to find another option if it available”.
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