Autumn mortgage data shows impact of mini-budget shock

The Bank of England has revealed mortgage data in the run up to the mini-budget – which took place 7 days before the end of the period. The value of mortgages that had been agreed for the coming months were the highest since the autumn of 2007 – just before the end of the financial crisis.

5% of new mortgages had a loan-to-value ratio of more than 90% – 0.9 pp higher than a year earlier and the highest since the start of 2020. Only 0.78% of outstanding mortgage balances were in arrears  the lowest since records began in 2007.

The Bank of England has released mortgage lenders and administrators’ statistics for Q3 2022: Mortgage Lenders and Administrators Statistics – 2022 Q3 | Bank of England

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “The profound impact of the mini-budget on the mortgage market has been laid bare, as rosy figures for the autumn have led to a far gloomier and more miserable winter. In the weeks leading up to the announcement mortgage rates had been rising for months, but still demand was booming. Mortgages agreed for the coming months were at their highest since the third quarter of 2007 – before the financial crisis.

“Buyers were still keen to snap up properties in a rising market, and felt the mortgage rate rises we’d seen since the end of last year were still under control. Mortgages agreed for the future had risen during the period – up 4.5% in a quarter and 11.2% in a year to £87.8 billion.

“All that changed overnight with the announcement of the mini-budget. Demand for mortgages plummeted, along with buyer enthusiasm. UK Finance now expects mortgage lending to fall 15% -back to pre-pandemic levels, while property sales will fall just over a fifth (21%). Predictions of property price falls vary, but overwhelmingly property values are expected to fall during 2023.

“Meanwhile, much higher mortgage rates are also expected to take their toll on those who come to remortgage. Alongside rocketing bills and expenses, it’s going to leave thousands of people struggling to cover the cost of their mortgage. UK Finance says an estimated 98,500 people will be in arrears next year. It’s a world away from the rosy glow of the autumn.”