Mortgage lending for residential home purchases grew by 16% in 2025 to 720,000 loans, the highest level since 2021, figures from UK Finance show.
The trade body’s Household Finance Review for the final quarter of 2025 found that gross mortgage lending for the year was £291bn, an increase of 20% compared to 2024.
Refinancing strengthened in the second half of the year, taking the total number of remortgages and product transfers to 1.86m, up by 14% from 2024.
Product transfers made up almost 83% of all refinancing at 1.54m.
Lending to first-time buyers was 18% higher year on year, with 391,000 mortgages agreed.
It follows changes to lending rules to allow more borrowers at the margins to access mortgages, but UK Finance says there will always be a limit to how far this can go while keeping loans affordable.
It expects growth in house purchases to taper off in 2026, as a result of affordability pressures.
Repossessions were 31% higher year on year at 8,430, but arrears were down by 14% to 90,050.
The figures come as separate data from the Bank of England was published today showing a drop in lending in January.
UK Finance managing director of personal finance Eric Leenders says: “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.
“Household savings continued to grow in the final quarter of 2025, while credit card balances with interest remained at record lows, with consumers increasingly using credit cards for ease and convenience rather than to manage financial pressures.”
National Association of Estate Agents Propertymark president Mary-Lou Press says: “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.
“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.”
