New mortgage figures released by UK Finance and the Bank of England reveal strong growth for lending in 2025, followed by a reduction in January of this year.
The Household Finance Review for Q4 2025 from UK Finance shows a 16% increase in mortgage lending – the highest level since 2021. But Bank of England figures reveal net mortgage approvals for house purchases decreased to 60,000 in January, down from 61,000 in December and below an average of around 64,1000 over the previous six months.
The mortgage market grew to its highest level since the pandemic in 2025, reaching 720,000 loans throughout the year. Innovative new products enabled more first time buyers to get on the property ladder, with 391,000 loans granted in 2025 compared to 391,000 in 2024.
The easing of mortgage lending rules by the FCA also allowed more people to access credit, but UK Finance warns stretched affordability could limit borrowers in 2026.
“Affordability remains tight despite regulatory easing, but the continued fall in arrears is reassuring,” Eric Leenders, managing director of personal finance at UK Finance said. “Gradually easing rates should help support borrowers in the year ahead.”
Mary Lou Press, president of NAEA Propertymark, said agents are seeing a similar picture.
“The continued growth in mortgage lending and the resilience of the market in 2025, including strong lending and refinancing volumes, reflects improving confidence among buyers and the benefit of widening access to mortgage credit,” she explained.
“However, our member agents continue to report that affordability remains a significant barrier, particularly for first-time buyers who are committing a large share of their income to initial repayments.
“While falling arrears and the uptick in savings are positive signs, sustained focus is needed on improving housing supply and ensuring accessible, sustainable lending that doesn’t simply stretch borrowers’ budgets.”
The easing of the recovery is reflected in the fall in net mortgage approvals recorded by the Bank of England, which Zoopla’s executive director Richard Donnell said aligns with trends being seen in the housing market.
“[The] sustained recovery in sales since 2023 is now starting to plateau,” he explained.
“Zoopla data shows 8% fewer buyers in the market than last year yet demand for mortgages is just 1% lower than a year ago. This is in line with the change in the number of housing sales being agreed which are just 2% down on last year with strong demand from first time buyers supported by the lowest mortgage rates for 4 years and less onerous assessments of mortgage affordability.“We believe that strong competition in the mortgage market will continue to support home buyers demand in the coming months.”
Nathan Emerson, CEO of Propertymark, suggested the figures reflect a market undergoing a period of moderation.
“Encouragingly, Propertymark member agents are reporting a near 25% increase in the number of viewings per available property compared to twelve months ago, demonstrating that buyer interest is clearly present. However, we are yet to see this heightened activity fully translate into completed transactions, reflecting an evident degree of caution among consumers.
“Although affordability conditions have improved compared to a year ago, many buyers are still carefully assessing their financial position before committing. We anticipate confidence will strengthen gradually as stability around borrowing costs continues to filter through, but for now the market is adjusting at a steady and measured pace.”
According to Mark Harris, chief executive of mortgage broker SPF Private Clients, enders are ready to provide the lift the market needs.
“Although mortgage approvals dipped again in January, there is an underlying resilience to the housing market which is starting to make itself felt now that the budget is out of the way,” he said.
“As we move towards spring, the good news for borrowers is that lenders are keen to lend and have the funds available to do so. Many of the big lenders have reduced their mortgage rates and while some have increased pricing, we expect rates to jump around, rather than significantly move one way or another.”