UK Finance released its Household Finance Review for Q3 2024, which explores trends in household spending, saving, and borrowing.
According to the update from UK Finance, mortgage lending grew for the second successive quarter, rising by “15 per cent year-on-year, despite the continuing affordability challenges facing first-time buyers.”
Household savings continued to grow in Q3, driven by an “8.5 per cent rise in deposits in notice accounts since the end of 2023.”
UK Finance further noted that arrears numbers fell by “three per cent in Q3, more than reversing the very modest increases seen in the first half of the year.”
UK Finance added that for those households who are concerned about their mortgage payments, assistance is currently available from their lender.
After returning to annual growth in the second quarter, mortgage lending rose again in the third quarter of this year (Q3), “with the number of completions increasing by 15 per cent year-on-year.”
UK Finance also shared in its report that mortgage activity throughout 2024 has been very “sensitive to changes in product pricing.”
In the third quarter, as lenders were able to “reduce prices further, we saw application volumes increase.” As stated in the update, this points “to further lending growth in the final quarter of 2024.”
Although affordability challenges have eased over the course of the year, they continued to “impact homebuyers and those looking to remortgage.”
Internal product transfers, where an affordability assessment is “not needed, remain popular and accounted for 83 per cent of all refinancing in Q3.”
UK Finance also noted in the report that for first time buyers, despite the downward movement in rates this year, “other factors including rising house prices are pushing affordability metrics back towards levels seen late last year.”
As previously reported, the number of mortgages in arrears “fell by three per cent to 106,630. Early arrears cases also fell again, suggesting we’ll see a further fall in total arrears numbers in Q4.”
There were 1,700 mortgage repossessions in Q3, “unchanged from Q2 and still substantially below pre-pandemic levels.”
UK Finance further noted that the courts continue to “work through their backlog of historic long-term cases from before the pandemic.”
Responsible lending policies mean that “relatively few households will fall into arrears, and possession is only ever a last resort.”
As cost-of-living pressures gradually ease, households are able to save more and, even with “cuts to the Bank Rate this year, there remain attractive rates of return in the savings market.”
Household savings increased again in Q3, with “growth being driven by deposits in notice accounts.”
UK Finance added that a total of £268.4 billion is now held by “high street banks in notice accounts, up 8.5 per cent since the end of 2023.”
Meanwhile, overdraft debt remained broadly flat through the quarter and outstanding credit card debt increased, albeit at broadly trend levels.
Eric Leenders, Managing Director of Personal Finance, said:
“We are seeing more signs that the cost-of-living pressures bearing down on households are beginning to ease, with mortgage lending and savings both increasing during the quarter. Notice accounts have proved popular for those households able to save more of their money.”
The update from UK Finance also noted that while the challenges facing households are far from over, the “picture that’s emerging from our data is one of gradual improvement. ”
They claim to know this will not be the case “for all households though and they’d encourage anyone who might be struggling to reach out to their lender for support.”