House prices: UK's property market sucks in £84bn of new mortgage lending

Residential living in West London, UK mortgage
Choice for mortgage borrowers has also plummeted. Photo: Getty

The property market remains strong despite the record high price of a house in the UK, with the outstanding value of all residential mortgage loans up 3.8% to £1.648bn.

The value of new mortgage commitments made by lenders in the second quarter of the year reached £83.9bn, a 1.7% increase over the previous quarter, according to figures from the Bank of England.

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“Things have changed in the housing market since Q2. It is still running red hot, but it is exhibiting the hallmarks of a slowdown. The various housing market indices suggests that new buyer enquiries have waned in recent months and the number of mortgage approvals for house purchases has fallen,” Myron Jobson, senior personal finance analyst at Interactive Investor, said.

“The cost of living crisis in tandem with soaring property prices, which have gone up faster than wages, and cheap mortgages rapidly going the way of the dodo have intensified the affordability squeeze.

“These factors, as well as the prospect of higher interest rates to rein in runaway inflation, are likely to go some way towards taming the frothy housing market.”

Research by MetLife found that 48% of people with a mortgage worry about whether they will still be able to manage repayments due to the cost of living crisis.

Read more: UK homebuyer enquiries slump as house prices continue to rise

Homebuyers needed £294,260 to afford a property in the UK as the average house price rose 0.4% in August.

Across the UK, property values were up by 11.5% annually in August, according to Halifax.

Choice for mortgage borrowers has also plummeted as the number of available products in the residential mortgage sector fell by 13% in August.

The number of available products dropped by 517 in August, leaving 3,890 on offer for September, according to figures from the Moneyfacts UK Mortgage Trends Treasury report.

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