Mortgage loans for the purchase of homes will grow by 16% to 720,000 loans in 2025, the highest level since 2021, according to figures from UK Finance.
The trade body’s Household Finance Review for the final quarter of 2025 shows that gross mortgage lending for the year was £291 billion, up 20% on 2024.
Refinancing strengthened in the second half of the year, bringing the total number of refinancings and product transfers to 1.86 million, an increase of 14% compared to 2024.
At 1.54 million euros, product transfers made up almost 83% of all refinancings.
Lending to starters was 18% higher year on year, with 391,000 mortgages taken out.
It follows changes to lending rules to allow more margin borrowers to access mortgages, but UK Finance says there will always be a limit to how far this can go while keeping loans affordable.
She expects that growth in home purchases will decline in 2026 due to pressure on affordability.
The number of seizures was up 31% year on year at 8,430, but payment arrears fell by 14% to 90,050.
The figures come from separate Bank of England data published today showing lending fell in January.
Eric Leenders, managing director of Personal Finance at UK Finance, said: “The mortgage market saw strong growth in 2025, with lending reaching its highest level since the pandemic and the number of new buyers supported by innovative products to increase access.
“Despite the easing of regulations, affordability remains tight, but the continued decline in arrears is reassuring, and gradual easing of interest rates should help support borrowers in the coming year.
“Household savings continued to grow in the final quarter of 2025, while credit card balances with interest remained at record lows, with consumers increasingly turning to credit cards for convenience and convenience rather than to manage financial pressures.”
Mary-Lou Press, president of the National Association of Estate Agents, said: “Continued mortgage lending growth and market resilience into 2025, including strong lending and refinancing volumes, reflect increasing buyer confidence and the benefit of expanded access to mortgage credit.
“However, our member brokers continue to report that affordability remains a key barrier, especially for first-time buyers who spend a large portion of their income on initial repayments.
“While falling delinquencies and the rebound in savings are positive signs, a continued focus is needed on improving housing supply and ensuring accessible, sustainable lending that does not simply put pressure on borrowers’ budgets.”