The Bank of England’s Mortgage Lenders and Administrators data found that lending above 90% LTV was also 1.4pp higher than the year before.
Rachel Springall, finance expert at Moneyfacts, said this showed “just how vital low-deposit borrowing has become in the housing market”, adding that it was “essential that lenders continue to adjust their affordability criteria fairly and create innovative products to help borrowers”.
Within the share of lending above 90% LTV, the proportion of gross mortgage advances above 95% LTV was flat on the last quarter, accounting for 0.5% of new lending, but was 0.2pp higher than the same period in 2025.
The share of gross mortgages advanced above 75% LTV was at its highest since Q4 2007, representing 47.5% of lending in Q2. This was 1.5pp higher than the preceding quarter and 4.2pp higher than last year.
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Gross mortgage lending soars
Over Q2, the value of all gross mortgage advances rose by 11.1% quarter-on-quarter to £77.4bn and surged 31.7% on last year.
The value of agreed lending increased 1.4% from the previous quarter to £79.2bn, which was 1.3% higher than the year before.
Rob Clifford, chief executive of Stonebridge, said that although the increase masked the fall in activity after the stamp duty threshold changed in April, “if we take a step back, both commitments and advances still look strong compared with long-run averages”.
“There remains huge momentum in the mortgage market and we remain very confident that our business and the sector will deliver the 2026 results we predicted at the start of this year,” Clifford added.
Richard Pike, sales and marketing director at Phoebus Software, said the figures reflected how difficult it was for the mortgage market to “find a clear direction this year”. He said: “There are certainly signs of market resilience with new mortgage commitments rising; however, uncertainty around the economic outlook and the path for interest rates continues to weigh on borrowers and lenders alike.”
The Bank of England noted a 0.2pp quarterly rise in share of lending with interest rates between 2% and up to 3% above the base rate, representing 3.1% of business during the period. This was the highest proportion since Q1 2023. Compared to last year, this was a 0.3pp increase.
The proportion of mortgage advances with interest rates 3% or more above the base rate was flat on the previous quarter at 2.4% and 0.3pp higher than the year before.
Some 11.8% of mortgage advances in Q2 were to borrowers with a single income and loan-to-income (LTI) ratio of four or above. This was 0.3pp lower than in Q1 and 1.8pp higher than a year ago.
The share of lending to borrowers with a joint income and LTI ratio of three or above stood at 34.2% in Q2, 1.2pp higher than in Q1 and 2.8pp up on the year before.
BTL lending falls to nearly two-year low
The Bank of England showed that gross mortgage lending for buy-to-let (BTL) purposes represented 8% of advances in Q2, the lowest since Q3 2024. This was also a 0.9pp fall on the previous quarter and 1.2pp lower than last year.
Advances to owner-occupiers made up 92% of business. Within this lending to owner-occupiers, the share of advances for remortgages rose 3.1pp quarter-on-quarter to 31.2%, the highest since Q1 2024. This was also 2.2pp higher than the same period last year.
There was a 1.6pp quarterly decline in the share of lending for house purchase, accounting for 56.1% of owner-occupied lending. This was 0.1pp up on the year before.
Further advances and other mortgage lending, including lifetime mortgages, fell 0.6pp on the last quarter to 4.7% of business, also 1pp lower than last year.
Within the 56.1% advances for owner-occupier house purchases, there was a 0.1pp fall in lending to first-time buyers, who made up 27.3% of the market. This was the lowest share of first-time buyer business since Q1 2024, and 0.1pp lower than the year before.
The share of lending to homemovers fell by 1.5pp on the last quarter to 28.8%, but remained 0.1pp higher than previous year.
Arrears and possessions near three-year low
There was a quarterly 1.9% decline in the value of outstanding mortgages with arrears to £19.7bn, the lowest since Q3 2023. Compared to last year, this was 7.3% down.
Within this, the value of non-regulated mortgages, including BTL loans and other residential lending, decreased by 3.4% from the last quarter to £4.2bn. This was also the lowest value since Q2 2023 and 12.7% lower than last year.
The proportion of total outstanding balances with arrears that are new arrears cases decreased by 0.2pp from the previous quarter to 9.1%, but remained 0.3pp higher than a year earlier.
The number of new possessions in Q2 2026 decreased by 7.1% from the previous quarter to 2,058, and was 15.6% lower than a year earlier.
The total stock of possessions decreased by 4.5% from the previous quarter to 8,825, the largest decrease since Q1 2021, but remained 1.7% higher than a year earlier.
Springall said the data showed that borrowers were “widely in control of their repayments”, while Pike said: “While affordability remains a concern, most households continue to meet their repayment commitments, suggesting that the pressures facing the market have not been translated into widespread financial distress.”
