9 September 2025
If you are covering the latest FCA mortgage lending statistics, please see the following comment from Karen Noye, mortgage expert at Quilter:
“The latest mortgage lending statistics from the FCA show the market slumped considerably following the changes to stamp duty which came into effect in April. In the second quarter, the value of gross mortgage advances plummeted by 24.2% compared to the previous quarter to £58.8 billion, marking the lowest level since the first quarter of 2024 and 2.4% lower than the year prior.
“The start of the year had seen a marked lift in lending activity as people rushed purchases before the shift in the tax rules saw their bills rise substantially overnight. However, with interest rates still high and stamp duty costs inflated, it came as no real surprise that there was such a downward shift in the months that followed.
“While the market has been stalling somewhat during this period of adjustment, we are beginning to see some momentum pick back up. The value of new mortgage commitments, which indicate future lending
agreements, rose by 14.6% from the previous quarter to £78.2 billion. This is the highest level since 2022 Q3, and 16.8% higher than a year earlier. Interestingly, the share of mortgage advances with loan-to-value (LTV) ratios exceeding 90% rose once again to 7.1%, the highest since 2008. This reflects 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.
“Meanwhile, new arrears cases as a proportion of outstanding balances decreased to the lowest level since the start of 2022, reaching 8.8% which is down from the previous quarter and lower than a year ago. The total value of mortgage balances in arrears also fell by 1% on the quarter to £20.9 billion. This is the lowest level since the end of 2023 and is 4.6% lower than the same period the year prior. This is a positive sign that household finances are on a better footing compared to the depths of the cost of living crisis.
“Stamp duty changes halted sales for a while, but as prospective buyers top up their savings to cover the increased costs, we will gradually see more return to the market. However, supply-side challenges persist, and the housing market faces a difficult winter as affordability remains such a barrier. Budget rumours are also adding to the uncertainty and talk of new property-related taxes could result in would-be sellers putting their plans on hold until they have a clearer picture, so there is still a risk that the market stalls further in the near term.”
