Mortgage purposes rose within the second quarter of 2025, signalling that we’re set for a busy few months of completions, Financial institution of England information reveals.
The worth of recent mortgage commitments elevated by 14.6% from Q1 to £78.2 billion, the best since 2022 Q3.
Accomplished mortgage lending noticed an anticipated drop in Q2, highlighting the distorting nature of alterations to stamp responsibility.
From 1 April the stamp responsibility was as soon as once more charged at 2% from £125,001 to £250,000, 5% on from £250,001 to £925,000, 10% on the quantity from £925,001 to £1.5 million, and 12% on any quantity over £1.5 million. Consumers of funding properties are topic to a 5% surcharge.
Simon Gammon, managing associate, Knight Frank Finance, stated: “Mortgage lending stays subdued, with gross advances down sharply within the final quarter. However the forward-looking indicators inform a unique story.
“New commitments are rising strongly, and the share of excessive loan-to-value lending has climbed to its highest degree since 2008. That means lenders are focusing on the buoyant first-time purchaser market, which has change into key to gaining market share.
“Curiously, lending at larger loan-to-income ratios fell, and that is the place some bigger lenders are in search of to achieve an edge on rivals. HSBC, for instance, has moved to five.5 instances wage for first-time patrons—displaying that competitors is strong whilst total volumes stay weak.”
New arrears instances dropped by 0.4% to eight.8% in Q2, the bottom price since Q1 2022.
Gammon added: “Encouragingly, arrears proceed to ease. New arrears instances at the moment are at their lowest since 2022, reflecting how effectively post-financial disaster rules have labored by means of this cycle’s spike in rates of interest.
“Forbearance has additionally performed an vital function – many lenders have been keen to supply measures comparable to capital compensation holidays, which have helped debtors climate the transition from ultra-low to larger mortgage charges.
“Taken collectively, this information suggests the system has labored: we’ve had a stress take a look at of upper charges, arrears are coming down, and exercise seems to be set to choose up.”
