Mortgage lending picked up in Q1 2025, with the outstanding value of all residential mortgage loans rising by 1.2% from the previous quarter to £1,698.5bn, according to the latest Mortgage Lenders and Administrators Return (MLAR) data.
This was 2.6% higher than the same period last year.
Gross mortgage advances increased by 12.8% to £77.6bn, the highest since the end of 2022, and were up 50.4% compared to a year earlier.
New mortgage commitments, covering lending agreed but not yet advanced, fell slightly by 1.5% to £68.2bn, but remained 13.5% higher than a year before.
The share of gross advances with loan-to-value (LTV) ratios over 90% rose by 0.4 percentage points to 6.7%, the highest since 2008.
Advances for house purchase by owner occupiers went up by 2.6 percentage points to 66.3%, the highest share since 2021.
Lending to first-time buyers (FTBs) increased by 1.8 points to 31.4%, a record high since reporting began in 2007.
Additionally, lending to homemovers rose by 0.8 points to 34.9%.
Remortgages for owner occupation dropped, with the share falling by 2.2 points to 21.3%, which was 10.5 points lower than a year earlier.
Meanwhile, new arrears cases as a proportion of outstanding balances with arrears fell by 1.7 points to 10.2%.
The number of new possessions went up by 12.3% to 2,307, the highest since 2019. The overall stock of possessions increased by 7.2% to 7,822.
REACTION:
Toby Leek, president of NAEA Propertymark:
“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.
“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.”
Richard Pinch, senior director, risk, at Broadstone:
“The first quarter of 2025 got off to a strong start, as mortgage lending increased by 1.2% and both new arrears cases, and the value of mortgage balances with arrears saw an encouraging dip from the previous quarter.
“A rush to fast-track property purchases ahead of the Chancellor’s new tax regime in April and two interest rate cuts from the Bank of England are most likely to have given mortgage lending a lift in the first three months of the year.
“However, financial pressures persist. The Chancellor’s new tax regime is now in force and today’s unemployment data shows increasing strains in the labour market.
“With many families still feeling the squeeze from the cost-of-living crisis, and economic uncertainty lingering, the full impact on mortgage performance may yet unfold in the quarters ahead.
“It’s therefore critical that lenders continue to take a balanced and supportive approach – helping borrowers manage through short-term pressures while keeping a close eye on longer-term risks.”
