11 March 2025
If you are covering the latest mortgage lending statistics from the Bank of England, please see the following quote from Holly Tomlinson, financial planner at Quilter:
"The latest mortgage lending data highlights a housing market that, despite ongoing economic uncertainty, remains remarkably resilient. The total outstanding value of residential mortgage loans has reached a record high of £1,678.2 billion, reflecting steady demand even as affordability remains a challenge. Mortgage lending is picking up, with gross mortgage advances rising nearly 5% on the quarter to £68.8 billion—the highest level since the end of 2022.
"More strikingly, new mortgage commitments have surged by over 50% compared to a year ago, indicating that many buyers and homeowners are keen to secure finance despite ongoing concerns over interest rates and house price trends. People are clearly adjusting to what is the new normal when it comes to mortgage rates. This has also translated into people being much more prepared for their fixed term deals coming to an end. For example, clients are getting in touch 12 to 18 months in advance wanting confirmation on what they can borrow so that when the time comes, they are able to get the best possible rate.
"First-time buyer activity remains incredibly resilient despite significant headwinds. The share of lending to first-time buyers has reached its highest level since records began in 2007. This suggests that, despite stretched affordability and mortgage rates that remain elevated compared to the ultra-low levels of recent years, many are still determined to get onto the property ladder. Many first-time buyers are taking shorter term fixed rates due to optimistic views of the future of the market. However, the ability to borrow is being pushed to its limits, with lending to borrowers at high loan-to-income ratios also on the rise. This reflects the reality that buyers, particularly in pricier areas, are needing to stretch their incomes further to access homeownership.
"Looking ahead, interest rates will remain a key factor shaping the market. While expectations are growing that the Bank of England cut rates further later this year, there is still uncertainty over when and by how much. Many lenders have already lowered mortgage rates slightly, but with borrowing costs still higher than they were a few years ago, affordability pressures persist. Changes to Stamp Duty in 2025 could also weigh on demand, particularly for first-time buyers who currently benefit from higher tax-free thresholds. With affordability still stretched, borrowers should remain cautious about overextending themselves. That said, the market remains active, and for those able to secure a mortgage at a manageable rate, there are opportunities to be found."
