The proportion of fixed interest rates rose from 78.9% in Q2 2015 to 80.7% in Q3 2015 as speculation of an imminent Bank Rate rise waned.
Average interest rates continued to drop - decreasing by 7 basis points in Q3 2015 to 2.76%, the lowest rate since the series began in 2007.
The overall value of the residential loan amounts outstanding in Q3 2015 was £1,281.9 billion, an increase of 0.8% compared with Q2 2015 and an increase of 2.1% over the past year.
New commitments increased from £59.3 billion in Q2 2015 to £64.2 billion in Q3 2015. Moreover, this was an increase of 19.8% compared to Q3 2014.
The value of residential loans advanced to first time buyers increased over the quarter to £12.7 billion from £10.9 billion. However the proportion of lending above 90% LTV decreased by 0.7 percentage points over the quarter to 2.8%.
The proportion of gross advances that are 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 2.0%.
There was an increase in value terms in buy-to-let lending over the past year - from £8.0 billion advanced in Q3 2014 to £9.7 billion in Q3 2015.
The number of new arrears cases in Q3 2015 was 20,335 - 2.2% lower than in Q2 2015 and the lowest level since the series began in 2007.
However new cases taken into possession totalled 2,881 in Q3 2015, an increase of 7.7% from Q2 2015 and a first increase since Q1 2014.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented:
“There was a significant increase in mortgage activity in the third quarter of 2015, with gross advances standing 11% higher annually. This spike in demand has been driven by record low mortgage rates – a result of increased lender competition and the continually low base rate. The average rate on gross advances in the third quarter was the lowest seen since the series began in 2007, and borrowers are clearly eager to take advantage of the excellent deals on offer.
“More and more borrowers have been fixing their rates in order to secure the best possible deals, with the proportion opting to fix climbing above the 80% mark for the first time this year. Such attractively priced rates won’t be around forever, but those in a position to take on a long-term fix will benefit from a longer period of savings.
“Although increased affordability is fantastic news for many consumers, the continued decline of above-90% loan-to-value lending is concerning. The proportion of lending in this category fell below 3% in Q3, and it is important that there are plenty of higher LTV products on as house prices continue to rise. Without such products, lower income borrowers will struggle to get a foot on the housing ladder.”
