Residential loan value continues to increase in Q2 2018 to over £1.4bn

Written by Oliver Wade
11/09/2018

The outstanding value of all residential loans has continued to grow in the second half of 2018, rising to £1,417.2bn, illustrating a 3.8% growth compared to Q2 2017, according to the Bank of England’s Mortgage Lenders and Administrators Statistics: 2018 Q2.

The report found that there has been an increase in the proportion of higher loan-to-value (LTV) loans when comparing the statistics from Q2 2018 to Q1, despite the figure dropping when comparing total annual figures. This anomaly can be credited to the rise in new property purchases, while remortgaging levels remain lower.

Furthermore, when compared to the second quarter of last year, there has been an increase in total gross advances, which has grown by 6.4% to £66.7bn. There was also a 6.9% growth in gross advances from the first quarter of 2018.

However, remortgaging, as a proportion of new lending, has actually declined by 2% compared to the Q1 2018, and accounts for just 30.8% of new lending in the second quarter. The total value of remortgaging lending in Q2 2018 was £20.5bn.

The statistics revealed the value of new commitments was £73.2bn, almost a 20% increase compared to the figure reported in the first quarter.

While the share of first-time buyers (FTBs) has increased to 21.4% in Q2 2018 (1.8% higher than Q1), the share of new buy-to-let lending has declined since the first quarter of this year, accounting for just 13.1% of new lending.

Although the proportion of total loans in arrears has grown when compared to Q2 2017, the figure has dropped from Q1 2018 when the value was standing at £14.8bn.

Spicerhaart Corporate Sales managing director Mark Pilling stated that: “While this is positive, there is a danger we could see this trend start to shift over the next few months.

“As the base rate rise last month starts to affect people’s monthly payments - and with another rate rise on the cards before the end of the year- there is a danger that people could start to struggle with higher monthly mortgage payments.

“While the vast majority of new mortgages are fixed rate deals, so won’t be affected by rate rises, around half of all mortgage owners – around 4 million people - are on either variable rates or trackers. Many of these borrowers will have got used to managing their finances around historically low rates, and could now be worrying about their affordability.”

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