Mortgage lending up 15% year-on-year: UK Finance

After returning to annual growth in the second quarter, mortgage lending rose again in the third quarter of this year, increasing by 15% year-on-year, according to the latest data from UK Finance.

Mortgage activity throughout 2024 has been very sensitive to changes in product pricing. In the third quarter, as lenders were able to reduce prices further, application volumes increased. UK Finance says this points to further lending growth in the final quarter of 2024.

While affordability challenges have eased over the course of the year, they continued to impact both homebuyers and those looking to remortgage. Internal product transfers, where an affordability assessment is not needed, remain popular and accounted for 83% of all refinancing in Q3.

For first-time buyers, despite the downward movement in rates this year, other factors including rising house prices are pushing affordability metrics back towards levels seen late last year.

Mortgage arrears and possessions

The number of mortgages in arrears fell by 3% to 106,630 in Q3. Early arrears cases also fell again, suggesting there will be a further fall in total arrears numbers in Q4.

There were 1,700 mortgage repossessions in Q3, unchanged from Q2 and still substantially below pre-pandemic levels.

Eric Leenders, managing director of personal finance at UK Finance, said: “We are seeing more signs that the cost-of-living pressures bearing down on households are beginning to ease, with mortgage lending and savings both increasing during the quarter.

“Although the challenges facing households are far from over, the picture that’s emerging from our data is one of gradual improvement. We know this will not be the case for all households though and I’d encourage anyone who might be struggling to reach out to their lender for support.”