Mortgages 

Rates on mortgage advances lowest since 2007

Rates on mortgage advances lowest since 2007

Mortgage interest rates on gross advances hit lowest level since 2007, while first-time buyer advances were also down, according to the regulator’s latest statistics.

The Bank of England and Financial Conduct Authority have published their latest mortgage lenders statistics, which revealed that the overall value of residential loan amounts outstanding was £1.26bn in the first quarter of 2015, an increase of 0.1 per cent compared with the fourth quarter of 2014 and up 1.5 per cent over the past four quarters.

The data showed that gross advances of £45.6bn were recorded in the first quarter, which were 3.2 per cent less than the first quarter of 2014 and 11.1 per cent less compared with the first quarter of 2014.

The overall average interest rate on gross advances decreased by 25 basis points, from 3.26 per cent in the fourth quarter of 2014 to 3.01 per cent in the first quarter this year. This was the lowest interest rate on gross advances since the series began in 2007.

However, the value of residential loans advanced to first-time buyers decreased over the quarter to £8.9bn from £11.2bn in the previous quarter.

There was an increase in value terms for buy-to-let lending over the last year - from £6.8bn in the first quarter of 2014 to £7.6bn in the first quarter of 2015.

The proportion of gross advances at a loan-to-value over 90 per cent decreased by 0.4 percentage points over the quarter to 3.3 per cent in the first quarter of 2015.

The proportion of gross advances to borrowers with a single income multiple of more than four times, decreased by 0.6 percentage points to 9.1 per cent at the start of 2015.

The proportion of gross advances that is a combination of an LTV over 90 per cent and loan-to-income multiple of more than 3.5 times for single income borrowers (or 2.75 times for joint income borrowers) decreased over the quarter by 0.4 percentage points to 2.1 per cent.

The number of new arrears cases in the first quarter of 2015 was 22,001.

This was 4 per cent less than in the fourth quarter of 2014 and was the least since the series began in 2007.

emma.hughes@ft.com