Mortgage lending hits record high amid Stamp Duty rush

The interest rate cut in August and the Stamp Duty deadline this April appear to have created a surge in mortgage lending at the end of last year, Bank of England data suggests.

The latest Mortgage Lenders and Administrators Return (MLAR) data for the fourth quarter of 2024 shows the outstanding value of all residential mortgage loans increased by 0.5% on a quarterly basis to £1,68bn – the highest stock of outstanding mortgage loans since reporting began in 2007.

It was also 1.3% higher annually.

The share of lending to first time buyers increased by 0.3 percentage points from the previous quarter to 29.6%, the highest share since reporting began in 2007 and was 1.9 percentage points higher than a year earlier.

However, the value of outstanding mortgage balances with arrears increased by 1.3% from the previous quarter to £22.1 billion, and was 8.4% higher than a year earlier.

Simon Gammon, managing partner at Knight Frank Finance, said:

“In August, the Bank of England executed its first rate cut of this cycle, kicking off a round of mortgage rate cuts that prompted a big uptick in demand from purchasers. That fuelled a 50% annual rise in new mortgage commitments as lenders positioned themselves for an anticipated recovery through 2025. 

“Interest rates in the post-global financial crisis era remained ultra low for the best part of 15 years, which enabled borrowers to afford ever larger mortgages, which in turn fuelled years of strong house price growth. Growth in the outstanding mortgage book will have slowed as mortgages have become less affordable, but its continued growth stands as a testament to the resilience of the UK housing market.”

“The value of outstanding mortgages with arrears has ticked up sharply as borrowers have come under pressure, however it is still a tiny proportion of total outstanding loans, so presents no threat to financial stability. That’s down to regulations introduced after the global financial crisis. The Government intends to loosen lending rules that have helped keep arrears low, and there are inherent risks in doing so, but a slow and steady approach could provide a boost to homeownership for those most in need without posing unnecessary risks to stability.” 

Toby Leek, president of NAEA Propertymark, added:

“The news that the number of first-time buyers is increasing is extremely positive. However, other data also suggests that the average person looking to step onto the ladder for the first time will likely find it increasingly difficult to do so in the future.

“With the average age of a first-time buyer increasing to around 33.5 years old and the amount of money needed to be put down as a deposit on a home continuing to rise to around £50,000, many people may find their home ownership aspirations difficult to achieve.

“To combat this, all governments need to implement support mechanisms to enable more people to buy their first home well into the future, as well as continue in their missions of building new homes for a growing population, as an undersupply of properties will push up house prices even further.”

Kindly shared by Estate Agent Today Picture courtesy of Adobe