The value of all UK residential mortgages crept up by 0.5% in the fourth quarter of 2024, to a total £1.68trn, new Bank of England (BoE) figures have shown.

This was 1.3% higher than the same quarter a year earlier and the highest stock of outstanding mortgage loans since the BoE’s reporting began in 2007.

The central bank’s Mortgage Lenders and Administrators Return (MLAR) is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.

According to the latest data, the value of new mortgage commitments – which covers lending to be advanced in the coming months – increased by 4.9% from the previous quarter to £69.3bn. This was the highest level since Q3 2022 and 50.7% higher than a year earlier.

As a proportion of total outstanding balances with arrears, new arrears cases increased by 2.3% from the previous quarter to 12% but remained 1.5% lower than Q4 2023. The figures also showed that the value of outstanding mortgage balances with arrears increased by 1.3% from the previous quarter, to £22.1bn, and this was 8.4% higher than Q4 2023’s level.

Commenting on the data, chief of sales and marketing at Phoebus Software, Richard Pike, said that “the broader economic environment remains uncertain”.

“Inflationary pressures have eased, and mortgage rates have continued their downward trend, but household budgets are still under strain from high living costs,” Pike added. “The industry will be watching closely to see if this reduction in arrears is the start of a sustained trend or a temporary dip as borrowers adjust to new financial realities.

“Proactive arrears management will remain critical, particularly with a significant volume of fixed rate deals due to mature in 2025. Lenders have increasingly turned to data-driven approaches to identify at-risk borrowers early and offer tailored support.

“The focus now will be on ensuring that these interventions continue to be effective in maintaining stability for both borrowers and the wider market.”

Financial planner at Quilter, Holly Tomlinson, added that interest rates would remain a “key factor” shaping the market going forward.

“While expectations are growing that the BoE will cut rates further later this year, there is still uncertainty over when and by how much,” Tomlinson commented. “Many lenders have already lowered mortgage rates slightly, but with borrowing costs still higher than they were a few years ago, affordability pressures persist.

“Changes to stamp duty in 2025 could also weigh on demand, particularly for first-time buyers who currently benefit from higher tax-free thresholds. With affordability still stretched, borrowers should remain cautious about overextending themselves. That said, the market remains active, and for those able to secure a mortgage at a manageable rate, there are opportunities to be found.”

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