New FCA/PRA data shows record-breaking surge
Britain’s mortgage market has witnessed a robust resurgence, led by a record-breaking surge in first-time buyers and a marked return to house purchases, according to the latest quarterly figures released jointly by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The data, compiled from nearly 340 regulated mortgage lenders and administrators, shows that the value of gross mortgage advances in the first quarter of 2025 climbed by a 12.8% over the previous quarter, reaching £77.6 billion. This marks the highest quarterly advance since the end of 2022, and an impressive 50.4% rise on the same period last year.
While lending commitments for future mortgages fell slightly - down 1.5% to £68.2 billion - they still stood 13.5% higher than a year earlier, suggesting continued strength in demand despite lingering economic uncertainty.
First-Time Buyers Lead the Charge
Among the most notable trends was a historic high in lending to first-time buyers. Of all house purchase advances made to owner-occupiers, 31.4% were to first-time buyers—an increase of 1.8 percentage points on the previous quarter and the highest share recorded since reporting began in 2007.
Overall, loans for owner-occupier house purchases rose to 66.3% of total gross advances, their highest since mid-2021. This upturn came at the expense of remortgaging activity, which dipped by 2.2 percentage points to 21.3%, as many borrowers continued to wait for what is an almost certain string of interest rate cuts.
The share of buy-to-let mortgages declined slightly to 8%, continuing a steady retreat in the face of tougher tax rules and regulatory headwinds.
A Shift Towards Higher Risk Lending
The data also points to a gradual relaxation by lenders to allow riskier borrowing. The proportion of loans with loan-to-value (LTV) ratios above 90% rose to 6.7%—the highest since the financial crisis days of 2008. Additionally, loans with LTVs exceeding 75% now account for 45.8% of all advances, a level not seen since 2007.
Read more: Lenders ease borrowing rules, raise LTV caps to boost buyer access
Meanwhile, there was a subtle shift in income multiples. Borrowing by individuals with high loan-to-income ratios—defined as single applicants borrowing more than four times their income or joint applicants borrowing over three times—remained elevated at 45.2%, albeit slightly down from the previous quarter. Within this cohort, the share of high-LTI loans to single borrowers increased again, now at 10.8%.
Arrears and Possessions: Signs of Stress?
Despite the buoyancy in new lending, signs of stress are emerging. The number of new possessions rose sharply to 2,307, up 12.3% on the previous quarter and the highest since the third quarter of 2019. The total stock of repossessed properties climbed 7.2% to 7,822. Still, arrears balances showed a slight decline. Outstanding mortgage balances in arrears dropped by 2.9% to £21.5 billion, although this remains marginally higher than a year ago. Notably, the share of mortgage accounts in arrears has held steady at 1.3%, unchanged year-on-year.
The Road Ahead
While the latest figures point to a recovering housing market fuelled by first-time buyers and looser lending conditions, the backdrop of elevated interest rates, subdued economic growth, and increasing repossessions underscores the fragility of the rebound.
Read more: Mortgage search volumes rise in May
Analysts suggest lenders are striking a delicate balance—supporting growth while managing risk exposure. The question for the quarters ahead will be whether this newfound momentum can weather a still-uncertain macroeconomic environment.
