Home mover mortgage lending hit 50-year low in 2023

The level of mortgage approvals for home-movers hit the lowest level since the 1970s amid the cost of living crisis in 2023, new data shows.

UK Finance’s quarter four household finance review highlighted how affordability pressures hit the housing market last year.

High inflation coupled with higher mortgage interest rates led to a sharp fall in mortgage lending across all sectors, the banking trade body said.

The number of loans to first-time buyers last year was the lowest since 2013, down 22.4% on 2022. But home movers, most of whom do not receive the same sort of help from family support or Stamp Duty exemptions, were hit even harder, with approvals falling by 26%. 

The 251,000 loans to home movers last year was the lowest figure since 1974, according to the review.

Affordability pressures meant borrowers were choosing longer mortgage terms to lower the cost of monthly payments, UK Finance said.

By the end of 2023, almost one in five FTBs were borrowing with a term of over 35 years, compared with fewer than one in 10 the year before.

The number of applications for mortgage loans actually rose in the fourth quarter of 2023 as inflation pressures eased, the Bank of England held interest rates and mortgage pricing continued to drop.

But UK Finance cautioned that mortgage pricing still remains higher than what many borrowers are used to.

Mortgages in arrears rose throughout 2023 to 107,250, the report said, but this number still accounts for less than 1% of the total number of outstanding mortgages. 

The number of possessions remained largely static during 2023, numbering 1,150 in the fourth quarter and 4,620 in 2023 as a whole. The possessions that are taking place are long-term cases from before the pandemic.

Eric Leenders, managing director of personal finance at UK Finance, said: “2023 was a tough year for UK households and we expect to see continued challenges in 2024. Affordability remains a barrier to home ownership, but pressures should start to ease gradually through this year and next.

“Amidst ongoing cost challenges, it’s encouraging that customers don’t look to be running up higher levels of unsecured debt. But we know some households will be more affected than others - if you are struggling with personal loan, credit card or mortgage repayments, please reach out to your lender as soon as possible for help.”