Net residential mortgage borrowing rose by £1.2 billion to £5.5 billion in September, the highest since March 2025, the latest Money and Credit statistics from the Bank of England show.
The annual growth rate for net mortgage lending increased to 3.2% in September from 3.0% in August, the highest since January 2023 (3.4%).
Gross lending totalled £24.9 billion in September, up from £23.0 billion in the previous month, while gross repayments rose slightly to £20.3 billion from £20.0 billion.
Net mortgage approvals for house purchase increased by 1,000, to 65,900 in September. Conversely, approvals for remortgaging with a different lender decreased by 600, to 37,200.
The average interest rate paid on newly drawn mortgages decreased by 7 basis points to 4.19% in September, the lowest since January 2023 (3.88%), continuing the downward trend observed since March 2025. The rate on the outstanding stock of mortgages remained unchanged at 3.89%.
Richard Merrett, managing director of Alexander Hall, commented: “A renewed strengthening in mortgage approvals reinforces the positive market sentiment and consistency that we’ve seen across the mortgage sector throughout 2025. Despite broader economic uncertainty, borrowers continue to show confidence, supported by more accessible mortgage products and steady lender appetite.
"There is, of course, a chance that we could see mortgage market activity reduce in the short term as the Autumn Budget approaches, with some homebuyers taking a brief pause to see what the Government has up its sleeve.
"However, any hesitation will be temporary and, with inflation now holding steady at 3.8% for the third month running, there’s growing optimism that a base rate cut could still arrive before Christmas. If so, it would help fuel renewed momentum and set the stage for a strong start to 2026.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With mortgage approvals picking up again in September, the underlying resilience of the housing market is in evidence despite many challenges facing it.
“The effective interest rate paid on new mortgages fell to 4.19% in September and since then, we have seen some lenders trim their mortgage rates further. However, with the rate on the outstanding stock of mortgages unchanged at 3.89%, affordability remains a concern for many.
“The good news for borrowers is that lenders are keen to lend and have the funds available to do so. Falling swap rates, which underpin the pricing of fixed-rate mortgages, are encouraging some of the big names to reduce mortgage rates as they look to pick up more business before the year end.
“Remortgaging numbers fell, suggesting that borrowers may be sticking with their existing lender and refinancing rather than going through the hassle of another mortgage application with a new lender.”
Joe Pepper, UK CEO at PEXA, added: “Sticky inflation and interest rates remaining has created a little bit of apathy in the market – people are no longer waiting for a better rate environment to buy or remortgage because they aren’t necessarily expecting this to happen any time soon. Empowering more individuals to confidently mortgage and remortgage. We are also starting to see the positive impact of affordability measures introduced earlier this year and it is positive to see the market start moving in the right direction.
However, as mortgage approvals increase, bottlenecks form across the market because the technology that sits behind the transaction process simply isn’t up to the job. Conveyancers, who are already under significant strain, will be pushed to their limits because they don’t have the right tools and technology in place to help them deal with demand. We need far greater attention placed on reforming the back-end infrastructure that supports the process to overcome this, delivering a more certain, secure and streamlined process. Addressing this could not be more urgent if we are going to maintain growth and reap the benefits.”
