"While this makes it feel very historic, it does show what might have been had the pandemic not hit"
The Mortgage Lenders and Administrators Return (MLAR) is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.
The Bank of England noted that the figures will "be only partially affected by the impact of Covid-19 and the related policy measures", but the data shows that mortgage demand was strong before the lockdown measures were introduced.
Alongside rising new commitments, the value of gross mortgage advances in Q1 was £65.8 billion, 3.8% higher than in 2019.
Within this, the share of mortgages above 90% LTV was 5.2%, 0.7pp higher than a year earlier.
The share of gross mortgage lending for buy-to-let purposes was 14.0%, unchanged from 2019 Q1.
However the figures show that in Q1 the number of outstanding balances with arrears began to increase, rising by 1.8% over the quarter to account for 0.91% of all mortgage balances.
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "The Bank of England data relates to the first quarter of the year when the impact of Covid-19 had not yet been felt. While this makes it feel very historic, it does show what might have been had the pandemic not hit, with an increase in gross mortgage advances compared with the previous year, as well as the value of new mortgage commitments.
"The share of mortgages advanced to borrowers requiring a loan-to-value greater than 90 per cent was 5.2 per cent, an increase on the previous year, illustrating the level of demand for high LTV deals. With lenders including Accord, Clydesdale and Virgin Money pulling out of the 90 per cent LTV market this week owing to high demand, after only recently returning when physical valuations were once again allowed, there is clearly a need for the big lenders to commit to this market. The number of people taking out high LTV mortgages in the second quarter is likely to fall considerably, not due to lack of demand but lack of products available.
"Encouragingly, buy-to-let lending was stable, even though the sector has come in for a lot of change on the tax and regulatory front. Investors are adapting to the new environment and tailoring their portfolios accordingly. The impact of tenants unable to pay their rent is providing a further challenge for landlords, although of course this won’t be apparent until the second quarter figures."
