UK housing activity continues to slow as mortgage lending slumps: BoE

Oscar Lopez
Housing Market Begins To Slow In UK
Mortgage lending has dropped in the UK last quarter. (Source: Getty)

The UK’s mortgage lending has dropped significantly in the first quarter, with the number of new commitments agreed to by lenders at their lowest level since 2016, according to the latest Bank of England (BoE) data.

The value of new commitments in the first quarter of the year was £61.1bn, a 5.9 per cent decrease from the fourth quarter of 2017.

There has also been a decrease in the amount of lending to first-time buyers, the BoE figures showed, with the share of first time buyers decreasing 19.6 per cent in the first a quarter, a 1.6 percentage point drop on last quarter.

Read more: UK mortgage lending leaps to £20.4bn in April

The share of buy-to-let lending has increased for the first time since the first quarter of 2017, however, accounting for 13.9 per cent of new lending.

Meanwhile, there has been 9.6 per cent drop in gross advances to £62.4bn from the fourth quarter last year to the first quarter this year.

However, this was still 3.3 per cent higher than the same three months in 2017.

The proportion of total loans in arrears has continued to fall, the BoE figures show, with the outstanding balance in arrears now £14.8bn - the lowest since records began.

Read more: Remortgaging in London surges in the first quarter

The shares of buy-to-let and re-mortgaged loans have increased since last quarter, the data showed, while remortgaging, as a proportion of new lending, has increased by 3.2 percentage points, compared to the previous quarter.

Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: “Although a little historic, the decrease in mortgage lending is disappointing. But of more concern is the fall in proposed advances.

“The reduction in the proportion lent to first-time buyers when buy-to-let investor borrowing increased for the first time in more than a year may be a sign that the government’s intention to ‘level the playing field’ between the two groups is not working.

“On the ground, we’ve noticed more interest in competitively-priced smaller houses rather than one and two-bedroom flats which have previously been favoured by first purchasers and landlords.

“However, commitment is hard to generate while political and economic uncertainty reigns unless buyers and sellers take full account of the new softer market conditions."

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