Gross mortgage lending and approvals both decreased in value during the final three months of 2025 compared to the previous quarter but remained up year-on-year.
The value of gross mortgage lending fell by 1.3% from the previous quarter to £79.4bn but remained 15.4% higher than a year earlier, according to the mortgage lending and administration statistics released by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
A greater decrease in the value of mortgage approvals of 11.9% to £69.9bn was recorded, the largest decrease since Q3 2023. However, the value of mortgages given the green light but yet to complete remained 0.8% up on the previous year.
Overall, the outstanding value of all residential mortgage loans increased by 0.8% from the previous quarter to £1,734.4bn, the highest stock of outstanding mortgage loans since reporting began in 2007, and was 3% higher than a year earlier.
Jo Carrasco, business partnerships director of Stonebridge mortgage and protection network, said: “The Budget created a headache for buyers last autumn, and this is the moment it really comes out in the figures. Growth in new advances ground to a halt, but it’s important to remember they were still more than 15% higher than a year earlier after the largest rise in mortgage advances for five years in the previous quarter. This was something no one expected would be repeated.
“It’s in the approvals figures that we see the big change this time and, of course, all fingers are pointing at the nervousness surrounding the November Budget, with rumours swirling of hefty tax rises. Buyers simply took their foot off the gas and bided their time.
“We saw a strong rebound in December once the budgetary uncertainty was out of the way, and we’ll see how housing market activity shapes up in the first half of this year, given the interest rate uncertainty created by conflict in the Middle East.”
High-LTV and high-LTI lending rises
The share of mortgages with a loan to value (LTV) higher than 90% increased by 0.9 percentage points on Q3 to 8.3%, the highest share seen by the market since Q2 2008 and 2.1 percentage points higher than a year earlier.
Within this, the share of mortgages advanced with LTVs over 95% increased by 0.1 percentage points from the previous quarter to 0.5% and was 0.3 percentage points higher than a year earlier.
The share of gross mortgage advances with LTV ratios exceeding 75% increased by 2.2 percentage points from the previous quarter to 46.9%, the highest share since Q4 2007, and was 2.9 percentage points higher than a year earlier.
The proportion of high-loan-to-income (LTI) lending also rose slightly by 1.7 percentage points from Q3 to 46.5%. This is the highest share of high-LTI lending recorded by the regulators since Q4 2022.
Lending by type
Buy-to-let (BTL) lending remained largely unchanged, retaining just over an 8% share of the market. The proportion of house purchase lending increased by three percentage points quarter-on-quarter but remained two percentage points down on the previous year.
Advances for residential remortgages fell by 3.1 percentage points compared to the previous quarter but remained 1.9 percentage points up on Q4 2024.
Mortgage balances in arrears fell in value by 0.9% quarter-on-quarter to £20.4bn – 5.3% lower than the previous year.
