A recent report from UK Finance revealed that residential mortgage lending grew by 16% in 2025. This was the highest since 2021, when interest rates were historically low, with the Bank of England base rate standing at 0.1% for the majority of that year.
Around 720,000 mortgage loans were taken out during 2025, reflecting increased confidence amongst buyers. 391,000 of the loans were granted for first-time buyers, with a wider range of products coming onto the market to support them in getting onto the property ladder.
Innovative products included no deposit and low deposit mortgages for first-time buyers, as well as some family-backed products where family members can support the deposit or increase the borrowing amount.
The Managing Director of Personal Finance at UK Finance released the following statement regarding the insights:
“The mortgage market saw strong growth in 2025, with lending reaching its highest level since the pandemic and first‑time buyer numbers supported by innovative products to widen access. Affordability remains tight despite regulatory easing, but the continued fall in arrears is reassuring, and gradually easing rates should help support borrowers in the year ahead.”
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Lending in the first quarter of 2025 was boosted by a surge in buyers looking to beat the new stamp duty rates introduced in April. The stamp duty threshold for first-time buyers dropped from £425,000 to £300,000 on 1 April 2025, so this created a rush to get home purchases over the line to avoid paying stamp duty.
Another factor that contributed to the increase in mortgage lending in 2025 was the changes to lending rules introduced by the Financial Conduct Authority. These involved modifying affordability assessments and further rule changes are outlined for 2026, focusing on supporting first-time buyers.
Economists have predicted that mortgage lending will experience steady growth throughout 2026. With 1.8 million fixed rate mortgages coming to an end this year, refinancing will account for a large volume of borrowing. However, continued affordability challenges will prevent a more significant growth in borrowing.
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