The value of new mortgage commitments reached its highest level since 2007 in Q3 2020, according to the Bank of England Mortgage Lenders and Administrators statistics.
This figure reached £78.9bn at the end of the third quarter of 2020, and was up 6.8% on Q3 2019.
The outstanding value of all residential mortgage loans was £1,527.3bn at the end of Q3, up 2.9% in the year to the third quarter.
Looking to the value of gross mortgage advances in Q3, this figure reached £62.5bn, representing a 14.7% decline on Q3 2019.
In addition, the share of gross advances with interest rates less than 2% above the base rate was 74.2% in 2020 Q3, this is 10 percentage points lower annually.
The share of mortgages advanced in Q3, with an LTV of 90% or higher, was 3.5%, this is 2.4 percentage points lower than Q3 2019.
Furthermore, the share of gross advances for remortgage for owner occupation was 25%, a three percentage point decline on Q3 2019.
The share for house purchase for owner occupation was 55.8%, up 2.6 percentage points year-on-year.
The value of outstanding balances with some arrears fell by 1.2% over the quarter to £13.8bn, and now accounts for 0.90% of outstanding mortgage balances.
Mark Harris, chief executive of SPF Private Clients, said: “The Bank of England figures show a strong lending market, as we have seen on the ground, with new commitments for the coming months some 6.8% higher than a year earlier.
“There is plenty of business in the pipeline which is working its way through as buyers try to take advantage of the stamp duty holiday.
“As long as they use good advisers – a mortgage broker and a switched-on solicitor – this should be possible, despite some scaremongering that they are already too late.
“The number of borrowers taking out high loan-to-value mortgages fell, with those borrowing more than 90% decreasing by 2.4 percentage points compared with a year ago.
“This is no real surprise with many lenders pulling back from this market, and it is only just starting to recover, which is good news for first-time buyers in particular.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Although reflecting activity from the last few months, the figures are interesting not just because they show the underlying strength of the property market at a time of turbulence but also how the dynamics of lending are changing.
“The numbers confirm what we have seen in our offices – that buyers and sellers are determined to ensure sales agreed get over the line before the stamp duty holiday ends, despite there being fewer higher loan-to-value products which tends to make it harder for first-time buyers.
“That trend has continued and shows little sign of reducing, although new business is now thin on the ground.
“An efficient agent, broker and solicitor should ensure the best possible chances of success as always.”
Carlos Thibault, board member of the Society of Mortgage Professionals and independent consultant, said: “The data clearly reflects the dramatic effect COVID-19 has had on the mortgage market, showing that gross advances in Q3 2020 were dramatically lower than during the same period the previous year.
“Conversely, there has been a significant V shaped recovery in new commitments driven by pent up demand during lockdown and the stamp duty reduction which comes to an end in March 2021.
“In terms of trends, there appears to have been a slight decrease in borrowing at the higher LTV ratio’s reflecting the reduction in product choice during lockdown, with an equally slight increase in pricing at the 2% to 2.99% margin above base rate.
“This reflects the rapid changes in product withdrawals and launches during this period of uncertainty. However, it is difficult to pick up the current trends in a fast changing environment due in part to the lag nature of the data provided.
“There appears to be a slight slowdown in activity in a traditionally extremely busy period for brokers, this is most likely driven by a belief that new cases will now be too late to take advantage of the stamp duty incentives.
“A better source of current trends are likely to be found ESIS and Mortgage Sourcing activity data”