UK mortgage lending saw its fastest quarterly rise in five years during the third quarter of 2025, with gross advances increasing 36.9% to £80.4 billion, according to new figures from the Bank of England. This marks the sharpest quarterly uplift since 2020 and reflects renewed momentum in the housing market.
The total value of outstanding residential mortgages reached £1,733.7bn, up 0.9% on the quarter and 2.9% higher than the same period last year. New mortgage commitments edged up 1.6% to £79.4bn, the highest level since late 2022 and more than 20% above last year’s figure.
Higher-risk lending continued to grow. The share of loans with loan-to-value ratios above 90% rose to 7.4%, its highest level since mid-2008. Lending to borrowers with elevated loan-to-income ratios also expanded, rising to 44.7%. Although this remains slightly below last year’s level, it represents the most significant quarterly increase since 2020.
Activity among home buyers strengthened, with purchase loans accounting for 58.6% of all advances, representing a quarterly rise of 2.5 percentage points. This remains lower year-on-year, however. Remortgaging for owner-occupation decreased slightly to 28.6%, but remained significantly higher than a year earlier.
Mortgage performance indicators improved over the quarter. Outstanding balances in arrears fell by 2.9% to £20.6bn and are now 5.8% lower than a year ago. The proportion of total mortgage balances in arrears remained steady at 1.2%, while new arrears cases fell to their lowest level since early 2022.
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