New figures show mortgage lending has plummeted to a 30-month low – but there’s light at the end of the tunnel!
The latest figures show that getting a mortgage has become even tougher, with total mortgage lending collapsing to its lowest level since December 2021, when interest rates first began to climb.
During the first three months of 2024, Brits borrowed a total of just £50.5 billion, a huge 13.1% less than during the same period in 2023.
This means mortgage lending was down 5.4% compared to the final three months of 2023, showing just how much rising interest rates are continuing to hurt.
Homebuyers hit hardest
The figures showed that those looking to buy a new home were hit hardest, with lending for house purchases down by 11.1% in the first three months of 2024, compared to the final three months of 2023.
This means just £29.7 billion was lent to homebuyers in the first quarter, as high interest rates continue to bite, despite rates being held at 5.25%.
Remortgage rush offers hope
Despite the gloomy figures, experts say there are some signs of hope emerging for the housing market, with more and more homeowners now choosing to remortgage.
The amount lent to those looking to remortgage actually increased by 3.5% in the first three months of 2024, with ‘other’ gross lending also seeing growth of 9.7%.
Experts say that the Bank of England’s recent decision to hold interest rates at 5.25% has given borrowers more confidence in the market, encouraging them to explore their options.
Jonathan Samuels, chief executive of Octane Capital, said: “Stability is key within the mortgage sector and such a sustained period of interest rate hikes was always going to dampen total gross lending.
“While we’ve seen an air of stability materialise following a hold on rates, this hasn’t been enough to rejuvenate lending on house purchases and we’re unlikely to see any substantial improvement until such time that the base rate is reduced.
“The good news is that this decision could come within the next few months and, when it does, it will bring a much needed boost to mortgage market sentiment.
“In the meantime, it’s those who already have a mortgage in place who are driving market activity, with the more stable landscape allowing them to better assess their options and remortgage with greater confidence.”