The total value of mortgage arrears in the UK fell to the lowest level seen since records began in 2007, the Bank of England revealed in publishing the Q2 Mortgage Lenders and Administrators Statistics (MLAR).
Arrears dropped 0.7% over the quarter and 7.2% over the year to £13.2 billion in Q2 2022.
Elsewhere, Threadneedle Street’s data paints the picture of a relatively healthy market in spite of the treacherous current economic environment.
The value of gross mortgage advances in 2022 Q2 was £77.9 billion, some £1 billion greater than the previous quarter, though 12.6% lower than in 2021 Q2 during the SDLT holiday.
The value of new mortgage commitments in Q2 was also 1.7% greater than the previous quarter at £83.9 billion.
Data from the Financial Conduct Authority also suggests that 95.5% of loans were on fixed rates during Q2, up from the 94% seen in the previous two quarters, as homeowners look to lock in lower rates ahead of further rate rises.
As for the types of mortgages people are agreeing, the share of gross advances with interest rates less than 2% above Bank Rate was 89.9% in 2022 Q2, 4.4pp higher than last quarter and the highest seen since 2008 Q3. The increase was, however, mostly driven by the 50bp increase in Bank Rate across the quarter, rather than any significant change in mortgage interest rates.
With regards to the loan-to-value (LTV) ratios on such products, the share of advances with LTVs exceeding 90% increased by 0.5% to 4.5% in 2022 Q2. This was 2.4% higher than a year earlier, and the highest seen since 2020 Q2.
Within this, the share of mortgages advanced with LTVs over 95% was 0.2%, broadly unchanged compared to the previous quarter.
The number of mortgages with a high loan-to-income (LTI) ratio also grew during the quarter, rising by 0.9% to 50.5% in total, though this remains 0.9% down on last year. Note that a high LTI is defined as anything of 4 or above.
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