New data points to rising confidence among homebuyers and remortgagers
Mortgage applications rose sharply in September, according to the latest figures from mortgage network Stonebridge, representing the largest year-on-year growth in application volumes recorded in recent months.
The network’s latest Mortgage Market Briefing, which analyses data from advisers who arranged over £12 billion in lending last year, revealed a 22.7% year-on-year increase in applications, signalling renewed confidence among borrowers.
The report also showed that the average loan size increased by 0.9% from the previous month, reaching £197,440, while the average mortgage rate declined by 32 basis points to 4.4%.
“The mortgage market is shifting up a gear,” said Rob Clifford (pictured right), chief executive of Stonebridge. “Applications rose 22.7% year-on-year in September — a clear sign that confidence is returning, even in the face of wider economic headwinds.
“A big driver is the fall in rates from their recent peak. The average rate on new lending now stands at 4.40%, down 32 basis points year-on-year. For a typical borrower, that equates to around £432 in annual savings compared with 12 months ago.
“While the Bank of England remains cautious on the future path of interest rates, current levels appear low enough to spur borrowers back into action. Coupled with the large number of loans due to mature in 2025, that should help underpin activity through the remainder of the year.”
Fixed rate mortgages continued to account for the majority of new business, with 95.4% of borrowers choosing to fix their repayments in September. This figure is just over one percentage point lower than a year earlier, reflecting a slight increase in interest in variable products. Clifford noted that while fixed rates remain the preferred choice, a small minority of borrowers are considering variable deals in anticipation of possible rate cuts, though most still value the certainty of fixed payments.
Shorter-term fixed rate products have grown in popularity, with 63.7% of new fixed rate loans in September set for three years or less, up from 56% a year ago. This trend suggests borrowers are seeking greater flexibility amid ongoing economic uncertainty.
Repayment mortgages remained the standard option, comprising 81% of new loans, a marginal decrease from 82% the previous year. Interest-only products continued to be used mainly by borrowers with robust repayment plans or access to significant bonuses. Clifford indicated that regulatory changes, such as recognising property sales as a valid repayment method, could make interest-only options more accessible, especially for first-time buyers.
Remortgaging activity dominated the market, accounting for 61.5% of applications in September, up from 57% a year earlier. Clifford attributed this to the large number of fixed rate deals due to mature and continued uncertainty over future interest rates, suggesting that remortgaging is likely to remain strong for the rest of the year.
The report also highlighted a slight decrease in average loan-to-value (LTV) ratios, indicating that borrowers are putting down larger deposits to secure lower rates. While rates have eased over the past year, they remain high by historical standards, prompting households to seek ways to reduce monthly payments. Clifford pointed to the permanent mortgage guarantee scheme and more flexible lending terms as factors gradually improving conditions for first-time buyers, which could eventually lead to higher average LTVs and increased competition among lenders.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
