Mortgage borrowing returned to growth in the third quarter after a slowdown in the second quarter, with growth continuing into October before flattening in November, according to both current and forward-looking data from UK Finance.
The figures, from the latest Household Finance Review for Q3 2025, show that the growth followed a quieter second quarter caused by transactions being brought forward ahead of the stamp duty threshold changes in April. Lending is now around the stable levels of 2022.
The data shows that refinancing also increased in the third quarter, with volumes up by 48% year-on-year as more customers rolled off fixed-rate deals. This equated to 557,000 loans in total. Internal product transfers continued to account for the majority of financing, illustrating customers’ preference for ease and speed when rolling off fixed-rate deals.
Affordability remains tight
However, affordability remains very tight. UK Finance’s figures show that first-time buyers are still paying around 22% of their gross household income on monthly mortgage payments. This is the highest share for nearly two decades. Its analysis shows more could be done to support those currently pushed out of the market.
This follows the Financial Conduct Authority’s recent Mortgage Rule Review which has opened the debate on adjusting lending rules to support wider homeownership. Current rules, while limiting arrears, have seen interest-only lending fall from more than a quarter of new loans in 2005 to just 1% today while lending to self-employed borrowers has dropped from 15% to less than 9%.
Eric Leenders, managing director of personal finance at UK Finance, says: “Affordability remains tight, but recent regulatory adjustments are helping widen access at the margins, and the FCA’s review raises important questions about how rules could be adapted to support underserved groups such as the self‑employed.”
There has also been a rise in higher loan-to-income following a modest relaxation in the Financial Policy Committee’s cap earlier this year. This has resulted in more lending at higher LTIs, particularly to first-time buyers, with 11% more FTB loans through Q3 than in the same period in 2024.
