The Bank of England’s Mortgage Lenders and Administrators Statistics showed lending to first-time buyers was 1.8% higher than the previous quarter and 5.6% up on the year before.
Meanwhile, the share of mortgages advanced to homemovers rose by a smaller 0.8% quarter-on-quarter to 34.9%. Compared to the year before, this was a 6.1% increase.
In Q1, some 66.3% of mortgages were lent for house purchases by owner-occupiers, the highest share since the second quarter of 2021 and 11.7% up on the same period in 2024.
The share of remortgage lending fell by 2.2% from Q4 last year to Q1 this year to 21.3%. This was a 10.5% drop on last year.
There was a 0.3% quarterly decline in the share of further advances and other mortgages, including lifetime mortgages, to 4.4% of lending in Q1. This was 0.9% lower than the year before.
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Gross mortgage lending for buy-to-let (BTL) purposes contracted by 0.2% to a share of 8%, and was 0.3% down on the year before.
High-LTV lending rises
Coinciding with an increase in lending to first-time buyers was a rise in advances exceeding 90% loan to value (LTV). This went up by 0.4% from Q4 to Q1, accounting for a 6.7% share of lending during the period – the highest share since Q2 2008. This was also 1.5% up on last year.
Within this, the proportion of lending at over 95% LTV stayed flat at 0.3% of the market.
The share of gross mortgage lending with LTV ratios higher than 75% was 1.7% up on the previous quarter to 45.8%, the highest share since Q4 2007. This was 7.8% higher than the same period in 2024.
The proportion of lending to borrowers with a high loan-to-income (LTI) ratio declined by 0.7% quarter-on-quarter to 45.2%, but was 5.5% up on the year before.
This includes borrowers with a single income and an LTI ratio of four or above, which rose by 0.7% quarterly to 10.8% and 2.8% annually.
Lending to borrowers with a joint income and an LTI ratio of three or above increased by 1.4% quarterly and 2.7% annually to a share of 34.4% in Q1.
Gross mortgage lending jumps in Q1
There was a 12.8% increase in the value of gross mortgage advances from the previous quarter to £77.6bn. The central bank said this was the highest value of new lending since Q4 2022, and 50.4% higher than in 2024.
The value of newly agreed mortgages fell by 1.5% from the last quarter to £68.2bn, and was 13.5% up on the year before.
The share of mortgages advanced with interest rates less than 2% above the base rate, including at or below it, stayed flat at 96.4% and was 0.3% higher than last year.
The share of advances with interest rates between 2% and up to 3% above the base rate also stayed unchanged on the previous quarter at 1.7%, and was 0.1% higher than in Q1 2024.
The proportion of lending with interest rates at 3% or more above the base rate was relatively unchanged at 1.9%, and was 0.4% down on the same period last year.
Possessions rise, new arrears fall
New arrears cases decreased by 1.7% quarterly to a share of 10.2%. This was 1.2% lower than the year before.
Meanwhile, the value of outstanding mortgage balances with arrears declined by 2.9% from the previous quarter to £21.5bn, but was 0.9% up on the year prior.
Of the £21.5bn mortgages with arrears, non-regulated mortgages – including BTL and other residential lending where the property is not used by the borrower – fell by 2.4% quarter-on-quarter to £4.7bn. This was 4.7% down on the same period in 2024.
The proportion of all mortgage loans with arrears was flat both annually and quarterly at 1.3%.
There was a 12.3% rise in the number of new possessions from the previous quarter to 2,307. This was the highest since Q3 2019 and 10% up on the year before.
The total stock of possessions increased by 7.2% quarter-on-quarter to 7,822, the highest since Q3 2014. This was 29.7% up on the same period in 2024.
A nuanced recovery
Holly Tomlinson, financial planner at Quilter, said the data showed that the market was “spurred on” by changes to stamp duty.
She added that it was interesting to see a rise in high-LTV lending, as it reflected “increased risk-taking as lenders seek to attract buyers with smaller deposits”.
Tomlinson added: “While this may once have been cause for concern, the strict lending criteria and stress testing rules in place today mean even in the volatile interest rate environments, customers should still be able to afford their mortgages.”
She said the fall in remortgage activity was likely because homeowners committed to deals before the recent increases in rates, while others might be “holding out hopes” of lower rates in the future.
Martyn Smith, CEO of Black & White Bridging, said the data “paints a nuanced picture of the mortgage market’s recovery”.
He added: “On the one hand, the sharp rise in gross advances and outstanding mortgage balances signals growing confidence among borrowers and lenders alike. But dig a little deeper, and we see a market still feeling its way forward.
“The surge in lending to first-time buyers is encouraging, showing that pent-up demand is being unlocked – yet the dip in remortgaging and softening in new commitments suggests many homeowners remain cautious, likely waiting for greater rate stability.”
Smith said from a specialist lending perspective, the rise in high-LTV borrowing indicated a growing appetite for risk and a greater importance on lenders who could manage more complex cases.
Smith added that “this must be balanced against a rise in possessions, which is a warning that affordability remains under pressure for many households.”
“In short, while momentum is returning, it’s far from a straightforward bounce-back. Lenders will need to remain agile, responsive and more personalised in their approach as the market continues to rebalance,” he added.
