Bank of England mortgage data – “encouraging that arrears levels have decreased to their lowest levels since recording began” – reaction from brokers

by | Mar 8, 2022

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The Bank of England’s Mortgage Lenders and Administrators Statistics (Q4) were published this morning. We ask brokers for their views on what’s actually happening out there in the mortgage market and how concerns over the inevitable rises to interest rates are having an impact. 

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “It’s encouraging that arrears levels have decreased to their lowest level since recording began in 2007. This is almost certainly a result of the fact interest rates have been at rock bottom for so long and the jobs market has remained pretty robust, despite the pandemic. Unfortunately, we may see arrears rise in the months ahead as the Bank of England raises interest rates to contain inflation and the cost of living squeeze starts to bite. Unsurprisingly, there is a stampede to remortgage and lock into the lowest possible fixed rates at present, before rates inevitably increase further.”

Ross Boyd, founder of the always-on mortgage comparison platform, “The drop in the value of mortgage advances in the last quarter of 2021 compared to the same period the year before was almost certainly influenced by the Stamp Duty holiday, which triggered a significant number of transactions in the second half of 2020. A slight increase in the number of mortgages with loan-to-values above 90% compared to a year ago shows the increased lender appetite for this buyer demographic and sector of the market. There is fierce competition in the mortgage market and many lenders are looking to higher loan-to-value products to boost their margins as a result.”

Rhys Schofield, managing director at Belper-based Peak Mortgages and Protection“Many prospective borrowers just aren’t aware that 95% lending exists again. We’re still getting approached by first-time buyers who think they need a 10% or 15% deposit, when 5% lending has been available for quite some time. Although rates crept up in the fourth quarter of last year, they raced up in the first two months of 2022. Though there has been no obvious slow-down or reduced appetite to lend from the banks, the issue is the lack of supply in the housing market, which is hindering transaction levels and continuing to drive prices upwards.”

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