New lending climbs to highest level since 2022, though remortgaging and arrears show mixed signals
The value of outstanding residential mortgage lending in the UK rose 1.2% quarter-on-quarter in the first three months of 2025, reaching £1.7 trillion, 2.6% higher than the same period in 2024, figures from the Bank of England (BoE) have shown.
Gross mortgage advances climbed 12.8% from the previous quarter to £77.6 billion — the strongest quarterly figure since late 2022. Compared to the same quarter a year earlier, this represented a 50.4% increase.
However, new mortgage commitments — loans agreed but not yet advanced — fell by 1.5% to £68.2 billion, although still up 13.5% year-on-year. This suggests some borrowers may be taking a more cautious approach amid ongoing interest rate uncertainty.
The BoE’s latest Mortgage Lenders and Administrators Return (MLAR) also revealed that high loan-to-value lending gained ground, with 6.7% of mortgage advances exceeding 90% LTV, the highest share since the second quarter of 2008. That figure rose by 0.4 percentage points from the previous quarter and 1.5 points from the previous year.
The proportion of lending for house purchases by owner-occupiers rose to 66.3%, up 2.6 percentage points on the previous quarter and the highest since mid-2021. Within that, loans to first-time buyers climbed to 31.4%, setting a record high since data collection began in 2007. Home mover lending also ticked up, reaching 34.9%.
Meanwhile, remortgaging activity for owner-occupiers dropped to 21.3% of total lending, down 2.2 percentage points on the quarter and 10.5 points from a year earlier.
In terms of risk indicators, new arrears cases declined to 10.2% of total outstanding balances with arrears — down 1.7 points from the previous quarter and 1.2 points year-on-year.
However, mortgage possessions saw a marked increase. The number of new possessions rose 12.3% on the quarter to 2,307 — the highest level since the third quarter of 2019. The total stock of possessions stood at 7,822, up 7.2% on the quarter and 29.7% from the previous year.
“It is encouraging to see enhanced confidence in mortgage lending overall during the first quarter of 2025 and that there is still a strong appetite for purchasing homes despite interest rates still being relatively high in contrast to recent years,” said Toby Leek (pictured left), president of industry body NAEA Propertymark.
“With hopes of interest rates dropping further over the coming months, hopefully this will enable more people to take their next steps within their housing journey and contribute to even greater levels of consumer affordability across the summer.”
For Martyn Smith (pictured centre), chief executive of specialist lender Black & White Bridging, the latest MLAR data paints a nuanced picture of the mortgage market’s recovery.
“The sharp rise in gross advances and outstanding mortgage balances signals growing confidence among borrowers and lenders alike,” he said. “But dig a little deeper, and we see a market still feeling its way forward.
“While momentum is returning, it’s far from a straightforward bounce-back. Lenders will need to remain agile, responsive and more personalised in their approach as the market continues to rebalance.”
Holly Tomlinson (pictured right), financial planner at wealth adviser Quilter, pointed out that the latest mortgage lending statistics show the market was spurred on considerably in the first quarter of 2025 by the changes to stamp duty which came into effect in April.
“The lowering of interest rates and improved buyer confidence will have contributed to this momentum in lending activity somewhat, but the changes to stamp duty that saw bills rise substantially overnight would no doubt have been the biggest driver,” she said. “This is reflected in the value of new mortgage commitments, which indicate future lending agreements, which fell by 1.5% from the previous quarter to £68.2 billion, though remained 13.5% higher than a year earlier.
“The stamp duty changes put wind in the sales of the market for a while, but looking ahead, market confidence and subsequent mortgage lending will likely hinge on the timing and pace of interest rate cuts, as well as the outlook for the jobs market.”
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