While new commitments increased from £46.3 billion in Q4 2014 to £47.2 billion in Q1, this was a decrease of 3.5% compared with Q1 2014.
The data also found that the proportion of gross advances at fixed rates decreased to 77.6% in Q1 from 82.2% in Q4 2014, as receding chances of an imminent interest Bank Rate rise prompted more mortgage borrowers to opt for variable rates.
The overall average interest rate on gross advances decreased from 3.26% in Q4 2014 to 3.01% in Q1 2015 - the lowest interest rate on gross advances since the series began in 2007.
The value of first time buyer loans decreased over the quarter to £8.9 billion from £11.2 billion in the previous quarter. This is highlighted by the proportion of gross advances to borrowers with a single income multiple of more than 4.00x decreasing by 0.6 percentage points to 9.1% in Q1 2015.
However there was an increase in value terms in buy-to-let lending - from £6.8 billion advanced in Q1 2014 to £7.6 billion in Q1 2015 - although it was unchanged from Q4 2014.
The overall value of the residential loan amounts outstanding was £1,261 billion in Q1, an increase of 0.1% compared with Q4 2014 and an increase of 1.5% over the past four quarters.
The proportion of gross advances at a loan-to-value over 90% decreased by 0.4 percentage points over the quarter to 3.3% in Q1 2015.
The proportion of gross advances that is a combination of an LTV over 90% and loan-to-income multiple of over 3.5x for single income borrowers (or 2.75x for joint income borrowers) decreased over the quarter by 0.4 percentage points to 2.1%.
However the number of new arrears cases dropped 4.0% Q4 2014 and was the lowest since the series began in 2007. The performance of loans in arrears – payments received as a percentage of payments due – decreased from 62.9% in Q4 2014 to 62.0% in Q1 2015.
New cases taken into possession totalled 3,179 in Q1 2015, a 23.7% reduction from Q4 2014. The stock of possession cases remaining unsold also decreased to 6,454 in Q1 2015, the lowest since the series began in 2007.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented:
“The mortgage market was lethargic in Q1 2015, with gross advances down more than 10 per cent on the previous quarter. However, the market has since pulled itself out of this slump, with house purchase lending in March up significantly month-on-month. A favourable economic backdrop means household finances are improving, while the removal of political uncertainty means the market recovery can progress on a smoother course.
“Consumers are the clear winners of the mortgage price war: average interest rates on all new loans have fallen to their lowest point since the Bank of England began recording this data in Q1 2007. Mortgages have never been so affordable, and this is having a significant impact on borrower behaviour. More borrowers are now willing to move away from the safety of a fixed rate mortgage to take advantage of rock-bottom variable rates, with the proportion of new fixed rate loans falling below 80 per cent for the first time in fifteen months.
“However, conditions are failing to improve for those who want a high loan-to-value loan. Just 3.3% of all new gross advances in Q1 2015 were at an LTV of over 90%: the lowest proportion since Q4 2013. With no hint of an extension of the Help to Buy guarantee scheme – and house prices continuing to climb – the prospect of having to save for a hefty deposit may leave some borrowers priced out of the market if the availability of high LTV loans does not improve.”
