Commentary on Mortgage lending statistics Q2 2025

The value of gross mortgage advances decreased by 24.2% from the previous quarter to £58.8 billion, the lowest since 2024 Q1, and was 2.4% lower than a year earlier (Table A and Chart 1).

The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 14.6% from the previous quarter to £78.2 billion, the highest since 2022 Q3, and was 16.8% higher than a year earlier.

The share of gross mortgage advances with interest rates less than 2% above Bank Rate (including at or below Bank Rate) decreased by 1.5pp from the previous quarter to 94.9%, the largest decrease since 2021 Q2, and was 2.1pp lower than a year earlier (Chart 2).

The share of advances with interest rates between 2% and up to 3% above Bank Rate increased by 0.9pp from the previous quarter to 2.6%, the highest since 2023 Q1, and was 1.4pp higher than a year earlier.

The share of advances with interest rates 3% or more above Bank Rate increased by 0.6pp from the previous quarter to 2.5%, the highest since 2023 Q4, and was 0.7pp higher than a year earlier.

These movements were mostly driven by the 25 basis point decrease in Bank Rate across the quarter, rather than any significant change in mortgage interest rates.

The share of gross mortgage advances with loan-to-value (LTV) ratios exceeding 90% increased by 0.4pp from the previous quarter to 7.1%, the highest share since 2008 Q2, and was 1.1pp higher than a year earlier (Chart 3).

Within this, the share of mortgages advanced with LTVs over 95% increased by 0.2pp from the previous quarter to 0.5%, the highest share since 2012 Q2, and was 0.2pp higher than a year earlier.

The share of gross mortgage advances with loan-to-value (LTV) ratios exceeding 75% decreased by 2.4pp from the previous quarter to 43.4%, but remained 0.6pp higher than a year earlier.

The proportion of lending to borrowers with a high loan to income (LTI) ratio decreased by 3.7pp from the previous quarter to 41.5%, the largest decrease since 2023 Q1, and was 1.0pp lower than a year earlier (Chart 4). Borrowers with high LTI are defined here as:

• Borrowers with single income who had a LTI ratio of 4 or above. This decreased by 0.7pp from the previous quarter to 10.1%, the first decrease in share since 2024 Q1, but remained 1.8pp higher than a year earlier.
• Borrowers with a joint income who had a LTI ratio of 3 or above. This decreased by 3.0pp from the previous quarter to 31.4%, the lowest share since 2017 Q1, and was 2.7pp lower than a year earlier.

The share of gross mortgage advances for buy-to-let purposes increased by 1.2pp from the previous quarter to 9.2%, the highest since 2023 Q1, and was 0.2pp higher than a year earlier (Chart 5). The share of advances to owner occupiers was 90.8%.

Of the 90.8% of advances for owner occupiers, the share of gross advances for remortgages for owner occupation increased by 7.7pp from the previous quarter to 29.0%, the highest share since 2024 Q1, and was 0.4pp higher than a year earlier. The share of gross mortgage advances for house purchase for owner occupation decreased by 10.3pp from the previous quarter to 56.0%, the lowest share since 2024 Q1, and was 1.4pp lower than a year earlier. Further advances and other mortgages (including lifetime mortgages) increased by 1.4pp from the previous quarter to 5.8%, the highest share since 2022 Q3, and was 0.9pp higher than a year earlier.

Of the 56% of advances for house purchases by owner occupiers, lending to first time buyers decreased by 4.0pp from the previous quarter to 27.4%. This was the same as a year earlier. The share advanced to home movers decreased by 6.3pp from the previous quarter to 28.7%, the lowest since 2023 Q1, and was 1.4pp lower than a year earlier.

New arrears cases (as a proportion of total outstanding balances with arrears) decreased by 0.4pp from the previous quarter to 8.8%, the lowest since 2022 Q1, and was 2.2pp lower than a year earlier. Arrears are defined as the borrower failing to make contractual payments where the balance owed is equivalent to at least 1.5% of the outstanding mortgage balance or where the property is in possession.

The value of outstanding mortgage balances with arrears decreased by 1.0% from the previous quarter to £20.9 billion, the lowest since 2023 Q4, and was 4.6% lower than a year earlier (Chart 6).

Of the £20.9 billion of outstanding mortgage balances with arrears, the value of non-regulated mortgages (including buy-to-let loans and other residential lending to individuals where the property is not for use by the borrower or qualifying dependents) decreased by 2.8% from the previous quarter to £4.6 billion, and was 7.5% lower than a year earlier.

The proportion of the total mortgage loan balances with arrears, relative to all outstanding mortgage balances, has stayed the same as the previous quarter at 1.2%, and was 0.1pp lower than a year earlier.