According to today's Mortgage Lenders and Administrators Statistics for Q2 2025, the outstanding value of all residential mortgage loans rose modestly by 0.3% from the previous quarter to £1.7 trillion, up 2.6% compared with a year earlier.
However, the value of gross mortgage advances fell by nearly a quarter (24.2%) from the previous quarter to £58.8 billion – the lowest level since early 2024 – and 2.4% lower than the same period last year.
In contrast, the value of new mortgage commitments, representing lending agreed but not yet advanced, surged by 14.6% on the quarter to £78.2 billion, the highest since the third quarter of 2022. On an annual basis, commitments rose 16.8%, suggesting stronger activity in the pipeline.
High loan-to-value (LTV) lending also picked up, with the share of advances above 90% LTV edging up 0.4% to 7.1% – the highest since 2008 – and 1.1% higher than a year earlier.
But lending to more stretched borrowers eased: the share of loans with a high loan-to-income (LTI) ratio dropped by 3.7 percentage points to 41.5%, the sharpest fall since early 2023.
The mix of lending also shifted. Advances for house purchase by owner-occupiers fell to 56% of the total, down 10.3% from the previous quarter and the lowest since early 2024. Meanwhile, remortgages for owner-occupation rose strongly, up 7.7 percentage points to 29% – also the highest since early 2024.
Signs of financial strain among borrowers continued to ease. New arrears cases fell to 8.8% of total balances in arrears, the lowest since early 2022. The value of outstanding mortgage balances with arrears also declined, slipping 1% on the quarter to £20.9 billion – 4.6% lower than a year earlier and the lowest since late 2023.
The figures highlight the ongoing adjustment in the mortgage market, with subdued new lending reflecting higher borrowing costs, but rising commitments pointing to tentative signs of a rebound in housing activity.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The fall in value of gross mortgage advances reflects the end of the stamp duty concession whereby buyers brought forward purchases to the first quarter in order to take advantage of the savings to be made. However, the increase in value of new mortgage commitments to the highest level since Q3 2022, an indicator of future lending activity, indicates a growing resilience in the market, with borrowers confident to take on debt. There may no longer be a stamp duty concession available but several base-rate reductions – with the prospect of more to come – are easing affordability and enabling borrowers to plan ahead and commit to purchases.
“Although lenders have been easing criteria, the decrease in lending to borrowers with a high loan-to-income ratio suggests that borrowers are not overextending themselves and rushing to take out bigger loans. However, with lending to first-time buyers decreasing compared with the previous quarter it remains tricky for those trying to get on the ladder for the first time, particularly if they don’t have help from the Bank of Mum and Dad."
Richard Pike, Chief Sales and Marketing Officer at Phoebus, said: “The latest MLAR data paints a broadly positive picture for the mortgage market. Overall lending is edging upwards and, importantly, arrears are continuing to fall, with both the number of new cases and the value of balances in arrears now at multi-year lows. This demonstrates the resilience of households in managing repayments despite ongoing affordability pressures. It is also encouraging to see new mortgage commitments at their highest level since 2022, signalling a strong pipeline of activity for the coming months. While gross advances dipped sharply this quarter, the growth in remortgage activity reflects borrowers’ focus on securing the best possible deals in a volatile rate environment. Taken together, the data suggests a market that is steadying, with both lenders and borrowers adapting well to challenging conditions.”
