10 March 2026
The shift in the mix of lending reinforces that picture. The share of lending for house purchase rose by 3 percentage points, the biggest quarterly jump since 2024, while remortgaging fell by a similar amount. That pattern typically reflects buyers taking advantage of a period where rates have stabilised and affordability has eased just enough to make transactions possible again. Gross advances decreased marginally but are still more than 15% higher than a year earlier, which fits that same narrative.
Arrears data also pointed to a market on steadier footing. Outstanding balances with arrears fell to their lowest level since 2023, and the overall arrears share held at 1.2%. That stability was giving lenders confidence to support higher LTV and higher LTI segments without broadening risk too aggressively.
The challenge is that this gradual improvement in affordability was predicated on falling swap rates and an expectation of rate cuts through early 2026. The US–Iran conflict has unsettled that trajectory. Higher oil prices and market volatility have pushed swaps up again, prompting lenders to pause or reverse planned reductions. This is likely to affect exactly the groups who had been returning to the market. For first‑time buyers, even a small rise in pricing can wipe out the marginal affordability gains that made Q4 activity possible. High LTV borrowing, which had finally recovered, is particularly vulnerable to tightening or repricing.
For those remortgaging, the timing is also unhelpful. Many households were expecting the spring to bring cheaper fixes, but instead may face slightly higher rates than anticipated. While arrears remain low, the pressure point is new affordability rather than existing borrower stress.
