Mortgage and protection network Stonebridge has today relaunched its Mortgage Market Briefing as a quarterly Mortgage Market Index (MMI), designed to examine key trends affecting the mortgage market throughout the year.
The Index found that the volume of remortgage applications surged 46% in Q1, prompting overall mortgage activity to jump by a quarter.
In the first quarter of 2026, overall mortgage activity rose strongly with 24.6% more applications year-on-year, driven largely by a 45.8% surge in remortgaging activity as borrowers continued to come off ultra-low pandemic-era mortgage products.
Five years ago, in March 2021, as the pandemic-driven ‘race for space’ was well underway, effective interest rates on new mortgage borrowing fell to just 1.85%.
The Bank of England’s Credit Conditions Survey for Q4 had predicted in January that remortgaging activity would increase in the first quarter, while secured lending activity for house purchase was expected to fall.
Stonebridge's MMI shows mortgage applications for purchase dipped 3.6% annually in Q1. Meanwhile, the share of variable rate mortgages climbed 0.8 percentage points (ppts) from 4.7% to 5.5% year-on-year, with fixed rate deals remaining the most popular at 94.5% of the market.
Mortgage terms of 2 years have been increasing in popularity, as their share rose by a quarter from 51.6% of all home loans to 65.2%. At the same time, the share of 5-year mortgages fell from 39.4% to 29%.
Borrowing costs fell annually, despite the impact of rising swap rates due to the Iran conflict in March. The average interest rate dropped 0.43ppts year-on-year from 4.74% to 4.31%. Loan-to-value ratios (LTVs) remained relatively stable, falling just 1ppt to 61%.
Interest rates had been on a downward path, boosting people’s ability to borrow and fuelling confidence. This has shown through in a 4% increase in loan amounts, rising to 7.3% for remortgages, despite property valuations climbing by just 2.3%
Remortgaging activity is expected to remain strong throughout the year. UK Finance reported in December that 1.6 million fixed-rate mortgages expired in 2025, with a further 1.8 million due to end this year.
Rob Clifford, chief executive at Stonebridge, said: “We know many borrowers locked into attractive five-year rates during the pandemic. Now that so many of those consumers are reaching the end of the deals they grabbed at that time, we are naturally seeing huge demand for advice on refinancing options.
“That will continue throughout this year, with plenty of lenders dynamically pricing both product transfers and remortgage deals to win market share.
“We’re likely to see a reversal in rate volatility in the second half of the year, and the popularity of variable or tracker rates might increase. If the energy crisis is short-lived, a variable product would allow borrowers to capitalise on a falling base rate once the conflict subsides, but this is a time when impartial and expert mortgage advice is worth its weight in gold.”
