The value of gross mortgage advances increased by 12.8% between Q4 2024 and Q1 2025 to £77.6 billion, the highest new advances since 2022 and 50.4% higher than a year earlier, according to the latest Mortgage Lenders and Administrators Return (MLAR) data collected by the FCA.
MLAR is a quarterly statistical release aggregated from data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators.
The latest data for Q1 shows the impact of the stamp duty deadline at the end of March, with Q1 mortgage lending increasing but the value of new mortgage commitments (lending agreed to be advanced in the coming months) decreasing by 1.5% from the previous quarter, although remaining 13.5% higher than a year earlier.
Mortgage lending by demographic
Residential advances increased by 2.6pp from the previous quarter to 66.3%, the highest share since Q2 2021, and was 11.7pp higher than a year earlier.
Of the 66.3%, lending to first-time buyers increased by 1.8pp to 31.4%, the highest share since reporting began in 2007, and was 5.6pp higher than a year earlier. As a result, the share of gross mortgage advances with LTV ratios above 90% increased by 0.4pp from the previous quarter to 6.7%, the highest share since 2008 and 1.5% higher than a year earlier.
The share advanced to home movers increased by 0.8pp to 34.9%, and was 6.1pp higher than last year.
The share of gross advances for remortgages decreased by 2.2pp to 21.3%, and was 10.5pp lower than Q1 2024.
Arrears and repossessions
New arrears cases fell by 1.7pp from Q4 2024 to 10.2% and were 1.2pp lower than a year earlier.
However, the number of new possessions increased by 12.3% to 2,307, the highest since 2019, and are 10% higher than last year.
The total stock of possessions increased by 7.2% from the previous quarter to 7,822, the highest since 2014, and are 29.7% higher than a year ago.
Martyn Smith, CEO of Black & White Bridging commented: “The latest MLAR data paints a nuanced picture of the mortgage market’s recovery. On the one hand, the sharp rise in gross advances and outstanding mortgage balances signals growing confidence among borrowers and lenders alike. But dig a little deeper, and we see a market still feeling its way forward.
“The surge in lending to first-time buyers is encouraging, showing that pent-up demand is being unlocked — yet the dip in remortgaging and softening in new commitments suggests many homeowners remain cautious, likely waiting for greater rate stability.
“From a specialist lending perspective, the uptick in high LTV borrowing — now at its highest level since 2008 — speaks to a growing appetite for risk and the increasing importance of lenders who can handle more complex cases. But this must be balanced against a rise in possessions, which is a warning that affordability remains under pressure for many households.
“In short, 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, financial planner at Quilter, added: “The latest mortgage lending statistics from the FCA 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. According to the data, the value of gross mortgage advances increased by 12.8% from the previous quarter to £77.6 billion. This is up 50.4% compared to the same period a year earlier and marks the highest level of new advances since the ill-fated mini budget in Q4 2022 which saw interest rates soar and market demand weaken.
“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. 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.
"Interestingly, the share of mortgage advances with LTV ratios exceeding 90% rose to 6.7%, the highest since 2008, reflecting increased risk-taking as lenders seek to attract buyers with smaller deposits. While this may once have been cause for concern, the strict lending criteria and stress testing rules in place today mean even in the volatile interest rate environments, customers should still be able to afford their mortgages. Conversely, remortgaging activity fell to 21.3%, down 2.2% on the previous quarter and 10.5% lower than a year prior. This is likely due to a combination of homeowners who already committed to deals during the earlier rate hiking cycle, but also people now holding out in hopes of lower rates in the near future before locking in a new deal.
“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. In response to the increase to employer national insurance contributions, some businesses are having to scale back hiring and are even cutting their workforces. This morning’s data showed payrolled employee numbers fell by a staggering 274,000 year on year according to early estimates for May, and should this continue, affordability will be stretched even further, confidence will diminish and mortgage lending would likely fall as a result.”
