The UK housing market saw a surge in mortgage lending towards the end of 2024, as buyers rushed to secure deals ahead of the April Stamp Duty deadline. Combined with August’s interest rate cut, this led to a significant increase in mortgage activity, according to Bank of England data.
Record-Breaking Mortgage Lending
The latest Mortgage Lenders and Administrators Return (MLAR) for Q4 2024 reveals that the total outstanding value of all residential mortgage loans rose by 0.5% quarter-on-quarter, reaching a record £1.68 trillion—the highest since reporting began in 2007. Compared to a year earlier, this represents a 1.3% increase.
First-time buyers also played a key role in this growth. The proportion of mortgage lending to first-time buyers increased to 29.6%—the highest share on record and 1.9 percentage points higher than the previous year.
The Impact of Interest Rate Cuts
According to Simon Gammon, Managing Partner at Knight Frank Finance, the Bank of England’s interest rate cut in August 2024 triggered a wave of mortgage rate reductions, encouraging buyers to enter the market.
This led to a 50% year-on-year rise in new mortgage commitments, as lenders prepared for a housing market recovery through 2025. Gammon also noted that while affordability challenges have slowed mortgage growth in recent years, the continued expansion of the mortgage market highlights the strength and resilience of UK property.
Mortgage Arrears on the Rise
Despite the positive lending figures, the number of outstanding mortgage balances in arrears has risen. The data shows a 1.3% increase from the previous quarter, bringing the total to £22.1 billion—an 8.4% rise year-on-year.
Gammon reassured that, while arrears have risen, they remain a small proportion of total mortgage lending and do not pose a risk to financial stability. However, as the Government considers loosening lending rules, there is a need for a careful, measured approach to ensure homeownership remains accessible without increasing financial risk.
Challenges for First-Time Buyers
While the rise in first-time buyer mortgage lending is encouraging, NAEA Propertymark President Toby Leek warned that buying a first home remains a significant challenge.
The average first-time buyer is now 33.5 years old
The average deposit required has risen to £50,000
The ongoing housing shortage continues to drive up house prices
Leek called for long-term government support to help first-time buyers enter the market, alongside increased housebuilding to tackle supply issues and ease affordability pressures.
Looking Ahead
With mortgage rates stabilising and buyer demand strong, the UK property market remains resilient despite economic challenges. However, for those looking to buy, sell, or remortgage, understanding how these changes may impact affordability and borrowing options is crucial.
At Chesworths Estates, we’re always here to provide expert advice. If you have any questions about your property journey, whether buying, selling, or investing, get in touch with our team today.
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