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 exhibits.
The worth of latest 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 obligation.
From 1 April the stamp obligation 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. Patrons of funding properties are topic to a 5% surcharge.
Simon Gammon, managing companion, Knight Frank Finance, stated: “Mortgage lending stays subdued, with gross advances down sharply within the final quarter. However the forward-looking indicators inform a distinct 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 concentrating on the buoyant first-time purchaser market, which has turn into key to gaining market share.
“Curiously, lending at larger loan-to-income ratios fell, and that is the place some bigger lenders are looking for to achieve an edge on opponents. HSBC, for instance, has moved to five.5 instances wage for first-time consumers—displaying that competitors is strong whilst general volumes stay weak.”
New arrears instances dropped by 0.4% to eight.8% in Q2, the bottom charge since Q1 2022.
Gammon added: “Encouragingly, arrears proceed to ease. New arrears instances are actually at their lowest since 2022, reflecting how properly post-financial disaster laws have labored by means of this cycle’s spike in rates of interest.
“Forbearance has additionally performed an vital position – many lenders have been prepared to supply measures corresponding to capital reimbursement 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 check of upper charges, arrears are coming down, and exercise seems set to choose up.”
