The value of agreed new mortgage commitments slumped by 16.5% to £51.5bn in the third quarter, from three months ago, data from the Bank of England shows.
This figure is 41.4% lower than a year earlier, the central bank adds, as higher interest rates constrain lending to households.
The BoE says the value of gross mortgage advances rose by 18.6% from the previous quarter to £62.2bn, the first increase since the third quarter of last year — but remained 27.6% lower than a year earlier.
The report also points out that £18.8bn of mortgage borrowing was in arrears in the third quarter of this year, up 11.4% in the quarter and 44% in a year.
The share of buy-to-let gross mortgage advances slipped by 7 basis points from the second quarter of the year to 7.5%, the lowest since the third quarter of 2010, and 5% lower than a year ago, according to the BoE’s latest Mortgage Lenders and Administrators Statistics report.
The outstanding value of all residential mortgage loans eased by 0.1% from the previous quarter to £1.65trn, and was 0.8% lower than a year earlier.
The survey comes against a backdrop that has seen the Bank of England base rate lift from 0.1% in December 2021 to currently stand at 5.25%
Quilter mortgage expert Karen Noye says: “This morning’s mortgage statistics from the Bank of England, illustrate quite how much higher interest rates have sent the market into chaos.
“However, despite these scary figures house prices have yet to tumble and in fact have recently been rebounding.
“These green shoots may soon be killed off by a winter frost if rates increase again or if there is another economic shock but for now house prices are remaining resilient.”
Hargreaves Lansdown head of personal finance Sarah Coles adds: “Arrears have reared their ugly heads, with total mortgage arrears up over 10% in a quarter and rising by almost half in a year.
“As a proportion of the total amount lent in mortgages, it hasn’t been this high since the middle of 2017.
“It’s hitting people with bigger mortgages harder, because while the total amount in arrears is soaring, the total number of borrowers was up less dramatically over the year – and actually fell over the quarter.
“It reflects how those who stretched their finances to get onto the property ladder, or trade up, are paying a horrible price for it now as their mortgage deals come to an end.”
