Mortgage lending plummets ahead of expected summer surge

Mortgage lending has fallen by -28.6% in the past year, according to a new analysis.

Octane Capital analysed gross mortgage lending data* from the past two years (March 2022 to February 2024) to understand how the amount of money being lent to homebuyers has changed. The latest figures show that over the past 12 months (March 2023 to February 2024), mortgage lending in the UK came to an accumulated total of £217.7 billion.

This marks an annual decline of -28.6% compared to figures from the previous 12 months (March 2022 to February 2023) when lending totalled £304.9 billion.

There are a number of contributing factors leading to the decline in mortgage lending over the past year, not least the increased cost of borrowing due to heightened interest rates and the overall cost of living crisis, both of which have limited buyer purchasing power and, as a result, mortgage lending market activity. 

But, looking forward, it seems the past year’s housing market troubles could be finally lifting, with mortgage approval numbers increasing as a hold on interest rates has helped to steady the market. 

In addition, further analysis from Octane Capital shows that historic seasonal housing market trends* are likely to bring a welcome boost over the coming months. 

Octane Capital’s analysis shows that, over the last five years, the summer season has seen mortgage lending totals increase by an average of 11.7% compared to the spring months. This summer boost has occurred every year over this five-year span, with the largest single bump coming in summer 2023 when mortgage lending totals rose by 24.6%. 

As such, Octane Capital’s research suggests that while the market is showing strong signs of recovery at present, this biggest surge in mortgage market activity is yet to come in 2024.

Octane chief executive Jonathan Samuels comments: “There is a real sense of optimism in the UK property market at the moment. It’s been a promising start to the year with mortgage lending seeing an uptick, mortgage approvals doing the same, and even house prices starting to slowly climb after a period of stagnation. 

“The picture is set to improve further as spring makes way for summer and seasonal market trends bring a healthy boost to the market. As such, we expect house prices to continue to stabilise which will inevitably tempt more sellers back to the fold.”