The total value of outstanding residential mortgage lending in the UK reached a record high in the final quarter of 2025 according to the latest data from the Bank of England.
Figures from the Bank’s Mortgage Lenders and Administrators Statistics (MLAR) show the stock of outstanding residential mortgage loans rose by 0.8% in Q4 to £1.734 trillion, the highest level since records began in 2007. The figure was also 3.0% higher than a year earlier, reflecting continued growth in the mortgage market.
However, the pace of new lending showed signs of cooling during the quarter. Gross mortgage advances fell by 1.3% to £79.4 billion compared with the previous quarter, although they remained 15.4% higher than the same period a year earlier.
At the same time, new mortgage commitments – an indicator of future lending – dropped more sharply, falling 11.9% quarter-on-quarter to £69.9 billion, the largest quarterly decline since Q3 2023. Despite the fall, commitments were still 0.8% higher than a year earlier, suggesting overall activity remains above 2024 levels.
BORROWING STRETCH
The data also points to borrowers stretching further to access homeownership. The share of lending with loan-to-value (LTV) ratios above 90% rose to 8.3%, up 0.9 percentage points on the previous quarter and the highest proportion since Q2 2008.
Similarly, the proportion of lending to borrowers with high loan-to-income (LTI) ratios increased to 46.5%, the highest level since late 2022.
In terms of lending purpose, mortgages for house purchase by owner-occupiers accounted for 61.6% of gross advances, up 3.0 percentage points from the previous quarter.
Meanwhile, the share of remortgaging fell to 25.4%, down 3.1 percentage points quarter-on-quarter.
Buy-to-let lending saw a modest rise, with its share of gross advances edging up to 8.4%.
ARREARS IMPROVEMENT
On the credit performance side, mortgage arrears continued to improve. The value of outstanding mortgage balances in arrears fell by 0.9% to £20.4 billion, the lowest level since Q3 2023 and 5.3% lower than a year earlier.
Overall, 1.2% of total mortgage balances were in arrears, unchanged from the previous quarter but slightly lower than the same period last year.
However, the proportion of arrears classified as new cases increased to 9.4%, marking the first quarterly rise since mid-2023.
