Bank of England figures showed that the total value of new mortgage loan obligations fell by about a third (33.5%) in the last quarter of 2022, compared to the previous three months.
The amount of lending of £58.4bn agreed to be made in the coming months was also about a quarter (24.5%) less than the previous year, according to Statistics Mortgage Lenders and Administrators.
The bank said that if the onset of the Covid-19 pandemic and the period immediately after it were excluded, this would be the lowest total seen since the first quarter of 2015.
The share of mortgages increased in the fourth quarter of 2022 as loan-to-value (LTV) ratios above 75% fell 1.4 percentage points sequentially, to 37.0%, but remained slightly higher than a year earlier.
Outstanding balances with arrears increased for the first time since the first quarter of 2021 to £13.6 billion.
Increases in the Bank of England’s base rate have generally pushed up borrowing costs.
Mortgage rates also jumped after the September mini budget.
“Mortgage approvals fell like a stone at the end of 2022, after a micro-budget drove up prices and sent potential buyers home,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.
She added, “The arrears will also be one to watch. We are still close to historic lows, but the number of people who are behind on their mortgage payments is starting to rise.”
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