The Mortgage Lenders and Administrators Statistics from the Bank of England reveal the total value of gross mortgage advances in Q1 increased by 12.8% from the previous quarter – up to £77.6 billion, the highest for new advances since 2022 Q4 and 50.4% higher than a year earlier.
New mortgage commitments (agreed lending yet to be advanced) decreased by 1.5% in Q1 of 2025 – but remain 13.5% higher than a year earlier. The share of gross mortgage advances for owner-occupied house purchases was up 26 percentage points from the previous quarter, to 66.3% – the highest share since 2021 and 11.7 percentage points higher than a year earlier.
Lending to first time buyers reached the highest share since reporting began in 2007 – up by 1.8 percentage points from the previous quarter to 31.4%, which is 5.6 percentage points higher than last year.
There was a slight increase in gross mortgage advances with loan-to-value ratios exceeding 90% (0.4 percentage points), but the rise was enough to take the share to its highest level since Q2 of 2008, with 6.7%.
Martyn Smyth, CEO of Black & White Bridging said the data ‘paints a nuanced picture’ of the mortgage market. He commented:
“On the one hand, the sharp rise in gross advances and outstanding mortgage balances signals growing confidence among borrowers and lenders alike. But dig a little deeper, and we see a market still feeling its way forward.
“The surge in lending to first-time buyers is encouraging, showing that pent-up demand is being unlocked — yet the dip in remortgaging and softening in new commitments suggests many homeowners remain cautious, likely waiting for greater rate stability.”
Richard Pinch, senior director of risk at financial services consultancy Broadstone, said the rush to fast-track property purchases ahead of stamp duty changes is likely to have given mortgage lending a lift. However, he warned that persisting financial pressures shouldn’t be overlooked:
“The Chancellor’s new tax regime is now in force and today’s unemployment data shows increasing strains in the labour market. With many families still feeling the squeeze from the cost-of-living crisis, and economic uncertainty lingering, the full impact on mortgage performance may yet unfold in the quarters ahead.”
Toby Leek, NAEA Propertymark president, said the figures show there is still ‘a strong appetite’ for purchasing homes despite interest rates remaining relatively high. He added:
“With hopes of interest rates dropping further over the coming months, hopefully this will enable more people to take their next steps within their housing journey and contribute to even greater levels of consumer affordability across the summer.”
