New FCA figures show gross mortgage advances up 31.7% year-on-year as remortgage demand climbs to a two-year high
Gross mortgage advances rose 11.1% in Q2 2026. The quarterly figure reached £77.4 billion, according to new data from the Financial Conduct Authority (FCA), published on 8 September. That marks a 31.7% increase on a year earlier.
The Mortgage Lenders and Administrators Return (MLAR) aggregates data from around 340 regulated lenders and administrators. New commitments reached £79.2 billion, up 1.4% on the previous quarter and 1.3% higher year-on-year. The outstanding value of all residential mortgage loans stood at £1,760.6 billion, a 0.8% quarterly rise.
Rob Clifford, chief executive of Stonebridge, warned against reading too much into a single quarter. He pointed to April 2025 stamp duty changes as a distorting factor, noting that approvals surged and advances slumped in the aftermath.
“These figures do jump around, distorted as they are by occasional interventions and events,” Clifford said. “Since the turn of this decade, there’s been a pandemic, a period of soaring inflation and two stamp duty cliff edges, most recently last year.”
Clifford placed Q2 2026 in context. It was the second-highest quarter for new mortgage commitments since Q3 2022 and the fourth-highest for gross mortgage advances since year-end 2022. “So there remains huge momentum in the mortgage market,” he said.
Remortgage share in gross mortgage advances rises to two-year high
One of the clearest trends in the Q2 2026 data is rising remortgage demand. The share of gross advances for owner-occupied remortgages rose 3.1 percentage points (pp) quarter-on-quarter. At 31.2%, that is the highest since Q1 2024 and 2.2pp above the year-earlier level.
Around 1.8 million fixed-rate mortgages were due to expire in 2026, compared with 1.6 million in 2025. That pipeline of expiring deals continues to generate remortgage volume and is unlikely to slow before year-end.
Meanwhile, the share of gross advances for owner-occupied house purchase fell 1.6pp to 56.1%. Buy-to-let (BTL) continued its slide, dropping 0.9pp to 8.0% – the lowest since Q3 2024.
What gross mortgage advances data means for specialist lending
Jon Cooper, director of mortgages at Aldermore, said the 11.1% quarterly increase in gross advances suggests activity is strengthening. He cited self-employed borrowers and those with complex or irregular income as examples of clients who fall outside a standard mortgage journey.
“Individual underwriting can help creditworthy borrowers access finance without compromising affordability standards,” Cooper said. He argued that a one-size-fits-all approach continues to lock out capable borrowers.
The share of gross mortgage advances with LTV ratios above 90% rose to 8.4%, the highest since Q2 2008. The share above 75% climbed to 47.5%, its highest point since Q4 2007. Both figures reflect sustained pressure on deposits, particularly among first-time buyers, where average LTV ratios hit a quarterly high in Q2.
Arrears fall, but affordability pressure remains a case management issue
The arrears picture improved in Q2 2026. Outstanding mortgage balances in arrears fell 1.9% quarter-on-quarter to £19.7 billion. This has been the lowest since Q3 2023 and 7.3% below the year-earlier figure. New possessions dropped to 2,058, down 7.1% on the prior quarter and 15.6% below a year earlier.
The proportion of total outstanding balances with arrears held at 1.1% – unchanged for two consecutive quarters. For brokers whose clients are approaching renewal under tighter affordability conditions, early lender conversations remain the most effective tool.
“From a consumer viewpoint, affordability has rightly been in sharp focus; however, it is extremely welcome news to see the value of gross mortgage advances increase during the second quarter of 2026,” said Nathan Emerson, CEO of Propertymark. He flagged the next Bank of England base rate decision and the Autumn Budget as likely influences on sentiment ahead.
Rate positioning and loan-to-income ratios
The share of gross advances priced less than 2% above bank rate dipped 0.2pp to 94.5% – the lowest reading since Q1 2023. The share priced 2% to 3% above bank rate rose to 3.1%, while the share at 3% or more held at 2.4%.
The proportion of lending to borrowers with a high loan-to-income (LTI) ratio rose 0.9pp to 46.0%, and was 4.6pp higher than a year earlier.
Clifford noted that while Lloyds had reported falling house prices, the gross mortgage advances picture told a different story. “Markets do sometimes have to adjust but house prices, mortgage volumes and transaction volumes aren’t the same thing,” he said.
The market is active and increasingly complex, making the case for how specialist lenders approach self-employed mortgage applications as relevant as ever.
