Mortgages  

Mortgage lending hits 13-year high

Mortgage lending hits 13-year high
 Credit: Joe Giddens/PA Wire

The value of mortgage lending agreed to be advanced in the coming months has reached a 13-year high, according to official data.

Data published today (December 8) by the Financial Conduct Authority and Prudential Regulation Authority showed the value of lending agreed to be advanced stands at £78.9bn, 6.8 per cent higher than a year earlier.

However, high LTV mortgages advances were down year-on-year, with LTV ratios exceeding 90 per cent making up a mere 3.5 per cent of mortgages in Q3 2020, 2.4 percentage points lower than a year earlier.

Mark Harris, chief executive of SPF Private Clients, said: "The Bank of England figures show a strong lending market, as we have seen on the ground, with new commitments for the coming months some 6.8 per cent higher than a year earlier.

“There is plenty of business in the pipeline which is working its way through as buyers try to take advantage of the stamp duty holiday.”

Mr Harris added: “The number of borrowers taking out high loan-to-value mortgages fell. This is no real surprise with many lenders pulling back from this market, and it is only just starting to recover, which is good news for first-time buyers in particular.”

The number of 90 per cent LTV mortgages available during the pandemic has been low, and at the start of December a mere 88 products were available in this segment. However, this was the highest since the beginning of June, as lenders have started to re-enter the market.

Accord Mortgages, for example, relaunched 90 per cent LTV products on a “more consistent” basis last month (November 18) after a series of limited releases. Its parent company, Yorkshire Building Society, launched a range of 90 per cent LTV mortgages in the following week.

Meanwhile, gross advances at rates less than 2 per cent above the Bank of England base rate have fallen year-on-year, at 74.2 per cent in Q3 2020, 10 percentage points lower than a year ago,.

The Bank of England base rate has been at a record low of 0.1 per cent since March.

It comes as separate data from Moneyfacts showed the average two-year fixed rate for all LTVs has been increasing over the past five months to its current rate of 2.49 per cent.

chloe.cheung@ft.com

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