Mortgage lending up despite rate fears

The UK mortgage market bounced back strongly at the end of 2024, driven by first-time buyers and home movers, according to UK Finance.

First-time buyer mortgages rose 16.4% to 334,000 last year, while home movers increased by 14.7% to 288,000. Total home purchases reached 622,000, up 15.6% overall. Lower mortgage rates boosted demand in 2024, especially in the fourth quarter, as buyers rushed to beat the changes to Stamp Duty rules this April. However, remortgage deals fell by 9% to 1.6 million, mainly due to fewer fixed-rate deals expiring. This is likely to change in 2025, with 1.8 million fixed-rate mortgages due to expire.

Stricter lending rules introduced from 2014 have made it tougher to secure high loan-to-income mortgages (over 4.5 times salary). As a result, first-time buyers in London now need deposits worth more than 2.5 times their annual income, compared to 1.9 times before 2014.

Eric Leenders from UK Finance said, “The strong end to 2024 highlights the resilience of UK households. But affordability remains a challenge, particularly in London. The upcoming regulatory review, expected this spring, could ease lending restrictions and help more people onto and up the housing ladder.”

Your home may be repossessed if you do not keep up repayments on your mortgage