Lowest Homeowner Lending Since ’09

If we omit the period immediately following the COVID-19 lockdown, the UK Housing market’s homeowner lending rate is at its lowest level since 2009.

This is looking specifically at home movers – rather than first-time buyers. However, the picture is similarly bleak when reviewing the first-time buyers lending market, which is also suffering; falling to its lowest level since 2015.

Reports show that the number of first-time buyers taking out a mortgage with terms in excess of 35 years hit an all-time recorded peak at 19% in March of this year; a trend which is reflected by the number of home movers taking out similarly lengthy mortgages, which peaked at 8%.

The UK Finance Household Finance Review for Q1 2023, has shown data on a parity with Market Forecasts, where cost of living and increases in interest rates are having a very much demonstrable effect on household affordability limits, which in turn is impacting on the demand for mortgage credit.

The challenges of the residential mortgage market are further evidenced with figures from the Bank of England showing borrowing of mortgage debt fell sharply in April 2023, with consumers repaying £1.4bn more than was taken out in new lending. The Bank said April’s figure, continuing a decline from net zero borrowing in March, was the lowest since records began in 1993, excluding the COVID-19 pandemic.

UK Finance have added that “as yet” there has been no tangible sign that UK customers coming to the end of their fixed rate mortgage deals are seeing their refinancing options limited by affordability constraints caused by interest rate, and cost of living increases.

This is clearly caveated though with the warning that, though there is no direct evidence to support the impact of the economy cost pressures on mortgage options, there may well be a correlation that these pressures “may now be tempering the willingness and ability to borrow more against their home”.

In addition to the flattening of the lending market, the report also highlighted the rise in arrears for Q1 2023, which albeit from a starting point that was very low and in the main from variable rate mortgages, (rather than the fixed rate lending which makes up the vast majority of current lending), still sparks concern in the market and industry as a whole, whereby lenders will want to ensure customers are helped as much as possible to “navigate periods of increased financial stress”.

As touched on above, the report highlights that around 80% of all arrears customers are on variable rates and given that almost all new lending is on fixed rates, the majority of arrears will be tied to much older mortgages.

So what does this mean for customers coming to the end of their fixed rate mortgages?

With the first year-on-year drop in savings for 15 years (in large part as result of the need to cover additional bills and spending) it is clear that household finances are tight, and borrowers are taking great effort to mitigate the size of their most substantial monthly outgoings – especially mortgages.

Many are stretching affordability with longer term mortgages, but in reality the offers made by lenders are fragile and changing regularly, resulting in the need to ensure a whole-of-market review of what is available at the point of remortgaging – typically by working with a whole-of-market broker.

Find out more about remortgaging and how our team can help you here.


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