Mixed outlook for mortgage market as economic pressures on households increase
Following today’s Bank of England Mortgage Lenders and Administrators Return (MLAR) data, Zoe Morton, consulting director, RSM UK said: “Today’s MLAR release shows a market that held its own throughout 2025 despite a challenging economic environment.
“Outstanding values of residential mortgages reached £1,734.4bn at the end of the 2025, the highest level since the financial crisis in 2007, and 3% higher than the previous year. Gross advances increased to 61.6%, the strongest uptick since Q3 2024. However new commitments decreased 11.9% to £69.9bn, the largest decrease since Q3 2023.
“Today’s figures indicate the market cooled slightly at the end of the year. Mortgage advances dipped, while LTVs (Loan to Value) continued to climb. This indicates lenders continued to support customers’ borrowing needs despite a cooler inflow of business.
“The uptick in new arrears and higher LTVs could indicate households are feeling the pressure again. This pressure on household budgets is set to continue in the coming months, particularly as energy prices rise, and a Bank of England base rate increase looks likely. The future for the mortgage market currently hinges on how quickly inflation stabilises, and how well people cope with the current economic outlook.”