Mortgage lending in the UK is expected to decline in 2024

In 2024, UK lending for home purchases is expected to decline by 8%, according to a trade group that represents banks.

Higher interest rates and household expenses, according to a UK Finance report, will make it more difficult for people to obtain mortgage credit, which is determined by affordability.

It was projected that this pattern would also result in lower lending overall and more repossessions the following year.

Nonetheless, lending is anticipated to have a better outlook in 2025.

According to UK Finance, loans for home purchases in the country should decrease from £130 billion in 2023 to £120 billion the following year.

By the end of 2023, there will be 105,600 cases of mortgage arrears or more than 2.5% of the outstanding balance. By the end of 2024, there will be 128,800 cases of mortgage arrears.

On Thursday, the Bank of England will make its year-end interest rate announcement. The financial markets are hoping that interest rates have peaked and may begin to decline after it kept them at 5.25% in November for the second consecutive month.

However, Andrew Bailey, the governor of the Bank, has consistently cautioned that it is premature to consider lowering interest rates.

Thanks to stringent affordability standards and low unemployment, over 99% of the 10.8 million mortgages in the UK, according to UK Finance, are currently in good standing.

Mortgage arrears have historically been mostly caused by unemployment, which is now at a low level.

According to the Office for National Statistics, the unemployment rate was 4.2% from July to September. The most recent data will be released on Tuesday.

In 2023, the remortgaging market suffered from higher bills as fewer homeowners were able to meet the affordability requirements.

(Sources: bbc.co.uk)