Figures show mortgage lending remains lively in Q1, though research shows bids to remortgage are being abandoned
Figures from the Building Societies Association (BSA) show that mortgage lending by building societies in the first three months of this year was on a par with lending in the same period last year, when the Stamp Duty holiday was in operation. Both lending and approvals were higher in January-March 2022 than they were in October-December 2021, immediately after Stamp Duty was re-imposed.
The stats show:
- Gross lending in Q1 2022 was £17.9bn, on a par with Q1 2021 (£18.0bn) and 11.7% above lending in Q4 2021 (£16.1bn)
- During Q1 this year, building societies approved 111,697 mortgage loans, down 6.0% on the 119,216 approved in Q1 2021 and up on the 102,542 mortgage loans approved in Q4 2021.
- Building societies hold outstanding mortgage balances of £358.0bn, up 4% on Q1 2021 (£343.0bn), a steady 23% share of the total mortgage market
- Building Societies lent to 25,208 first-time buyers in Q1 2022 broadly on par with the 25,735 mortgage loans in Q1 2021
Robin Fieth, Chief Executive of the BSA, commented on the findings:
“The housing market was vibrant between January and March this year, despite rising house prices and the re-imposition of Stamp Duty. The fact that building societies lent as much during this period as they did during Q1 2021 with no Stamp Duty payable is testament to their presence and competitiveness in a busy market.
The limited number of properties being put up for sale, coupled with the rising cost of living, is likely to result in a more subdued housing market as the year progresses. With over 80% of existing mortgages on fixed rates, this won’t apply to the remortgage market which we expect to remain active.“
Yet, despite the positive outlook for mortgage lending, the latest findings from fintech firm PEXA suggest that as many as one in five (20%) mortgage borrowers looking to remortgage in the last 24 months have battled so much with application issues that they abandoned it altogether.
A further 28% chose to persevere, but experienced severe delays. As a result, 76% of respondents felt the remortgage process is not fit for purpose.
PEXA’s analysis found that consumer experiences have gotten worse since the start of the pandemic, as increased demand, combined with remote working, has put pressure on the conveyancing process.
Unfortunately, the issues observed within the mortgage process have directly impacted consumers’ finances and wellbeing. Of those who abandoned an attempt to remortgage, 27% reported that they missed out on a better mortgage rate as a result, 30% found it stressful, while 23% said the anxiety inducing nature of the process caused them to lose sleep.
James Bawa, Chief Executive, PEXA UK, commented:
“Normally, a mortgage is a person’s biggest monthly outgoing and as interest rates rise, this will likely increase. With other bills also going up, most will now need to think carefully about how they can shore up their finances. Key to this is finding the right mortgage, something that’s best done by considering all the available options. Unfortunately, because so many people have experienced issues with the remortgage process over the last few years, many are being put off from doing this.
Importantly, the entire industry is working together to provide better consumer outcomes. Part of the problem is that the process homeowners go through to remortgage is disjointed and still relies on an outdated 150-year-old conveyancing process. The pandemic exploded these underlying issues.
In Australia – the first country in the world to create a digital process for lodgement and settlement – people wanting to remortgage could do so in just a day.”
The full BSA figures are available here.
