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The industry body representing banks predicts that UK home buying lending will fall by 8% in 2024.
The UK Treasury said in a report that rising interest rates and household costs will make it harder for people to access mortgage credit on an affordability basis.
We predict this trend will continue to lead to a decline in all loans and an increase in foreclosures next year.
However, the lending outlook is expected to brighten in 2025.
Britain’s Treasury forecasts that lending to buy homes in the UK will fall from £130bn in 2023 to £120bn next year.
James Touch, head of analysis at UK Finance, said: “2023 will see future mortgage borrowers face increasing affordability pressures from rising interest rates and rising costs of living, and with house prices remaining high. It’s been a very difficult year for existing mortgage borrowers.” income”.
He said: “Most existing customers looking to refinance their loans are choosing to transfer products with their current lender, where an affordability test is not required.”
These challenges have caused some homeowners to fall behind on their mortgage payments and incur late fees.
The number of mortgage delinquencies is projected to increase from 105,600 (more than 2.5% of outstanding balances) by the end of 2023 to 128,800 by the end of 2024.
The number of foreclosures is estimated to be 4,400 in 2023, but the UK Treasury said this was an “incredibly low number compared to historical comparisons”.
The report noted that more than 99% of the UK’s 10.8 million home loans are currently in arrears, thanks to strict house affordability checks and low unemployment rates.
The report notes that unemployment has historically been the main cause of mortgage delinquency, and that levels are very low.
Rising bills also hit the 2023 remortgage market, with fewer homeowners meeting affordability requirements.
Britain’s Treasury was more optimistic about 2025, saying it expected pressure on household finances to improve, although it would take some time to ease.
The mortgage market has become more adept at serving customers facing financial hardship, especially since the pandemic, said Sarah Thompson, managing director of financial services at MortgageScout, an online mortgage broker and advisory. It is said that there is.
Mr Thompson said 2024 was likely to be a difficult year, but households had been very good at adapting to the new lending environment and “buttoning down the hatches”.