Base rate cut, sharper pricing and steady remortgage flows offset pressure from affordability and weaker purchase volumes
Net borrowing of mortgage debt by individuals rose to £4.5 billion in November, up from £4.2 billion in October when net borrowing had eased by £1 billion.
Latest figures from the Bank of England also showed that gross advances slipped by £0.6 billion to £23.7 billion, while total repayments fell more sharply, down £3.1 billion to £19.4 billion.
The annual growth rate of net mortgage lending picked up to 3.3% in November from 3.2% a month earlier, the strongest rate since January 2023, when it stood at 3.4%.
Mortgage approvals data also showed a mixed picture. Net approvals for house purchase, seen as a guide to future secured lending, declined by 500 to 64,500 in November. Approvals for remortgaging where the borrower switched to a different lender rose by 3,200 to 36,600.
Pricing trends shifted slightly. The “effective” interest rate – the average rate actually paid – on newly drawn mortgages increased for the first time since February 2025, edging up to 4.20% in November from 4.17% in October. The average rate on the existing stock of mortgages moved to 3.90%, from 3.89% a month earlier.
“Throughout 2025, it has been encouraging to see lenders offering increasingly competitive mortgage products, particularly any aimed at first-time buyers, helping to support activity despite wider economic uncertainty,” said Nathan Emerson, chief executive of industry body Propertymark.
“The base rate cut introduced before Christmas is likely to further boost confidence as we head into 2026, making borrowing more affordable and encouraging more buyers to take the next step. Should base rates ease further over the course of the year, this would provide additional momentum for mortgage lending.
“With already greater levels of consumer flexibility than only 12 months ago, we hope this trend continues, with future reports hopefully reflecting growing confidence for those looking to purchase their first home or move further up the housing ladder.”
Tomer Aboody, director at specialist lender MT Finance, also highlighted the potential for further activity at the start of the year. “As borrowing levels increased towards the end of last year, further activity is anticipated at the start of this one, as buyers and sellers absorb any Budget fallout and decide to keep moving – literally,” he said.
“Although mortgage approvals are down, with interest rates also falling we are hopeful of further activity soon.”
Meanwhile, Jason Tebb, president of property listing platform OnTheMarket, linked the November approvals data to the policy backdrop. “Intense speculation ahead of the Budget and the repercussions it might have for the housing market had an impact on approvals for house purchases – an indicator of future borrowing,” he said.
“Even so, approvals decreased only slightly in November, underlining the overall resilience and determination from buyers and sellers alike to proceed with their moves.
“With the rate on newly-drawn mortgages increasing for the first time since February 2025, affordability challenges continue. However, the Bank of England base rate cut in December, with more expected to come this year, should provide borrowers with further relief. With lenders already cutting their mortgage rates this month as they try to get off to a strong start, there is further good news for borrowers.”
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.
