The value of new mortgage liabilities rose by 12% in the first quarter compared to the previous quarter, reaching £78 billion, but the value of mortgages that rose during the three-month period fell by a similar amount.
The latest figures from the Bank of England show that the value of gross mortgage advances has fallen by more than 12% from the previous quarter to just under £70 billion.
Of the 91% of mortgage advances granted to homeowners, the share of loans intended for mortgage refinancing increased by 2.7 percentage points (pp) compared to the previous quarter and by 6.8 percentage points year-on-year to 28%.
The share of owner-occupier advances intended for purchase fell by 3.9 percentage points from the previous quarter and by 8.6 percentage points year-on-year to approximately 58%.
Within this period, advances for first-time buyers on the housing market and advances for home movers fell.
The share of gross mortgage advances for rental properties increased by 0.5 percentage points compared to the previous quarter and by 0.8 percentage points on an annual basis to almost 9%.
Mary-Lou Press, president of the National Association of Estate Agents, said: “These figures paint a mixed picture for the UK mortgage market.
“Although the value of gross mortgage advances declined during the quarter, the increase in new mortgage commitments suggests that lending activity could increase in the coming months.
“It is encouraging to see a modest increase in the share of buy-to-let mortgage advances, despite significant changes in the law affecting landlords in the UK.
“However, many property investors remain cautious about the impact of reforms such as the Renters’ Rights Act and the Housing (Scotland) Act, and it remains to be seen how these changes will influence investment decisions in the longer term.
“At the same time, continued cost-of-living pressures and global economic uncertainty continue to impact lending decisions.
“With the Bank of England’s next key rate decision looming, the housing market will be closely watching to see if there is any impact on affordability, confidence and future market activity.”
Richard Pike, head of sales and marketing at Phoebus Software, said: “The figures indicate that the mortgage market has made a steady start to 2026.
“The decline in gross mortgage advances shows that the market was still weak at the start of the year, but the increase in liabilities shows that confidence was picking up in the first quarter before the market shocks caused by the conflict in Iran.
“There was a continued shift towards mortgage refinancing as a significant number of borrowers reached the end of their fixed interest rates.
“This will remain a defining feature of the market throughout the year as households continue to adapt to a higher rate environment.
“Encouragingly, payment arrears continue to decline and are at their lowest since the third quarter of 2023, underscoring the resilience of borrowers despite ongoing affordability pressures.
“This will reassure lenders that while cost pressures persist, most customers are managing to keep their repayments under control.”
Pike added: “We saw a gradual increase in possession activity, although the numbers remain lower than last year.
“While I do not believe this is cause for alarm, it is important that lenders remain vigilant and ensure their service teams are equipped to support customers who may still be vulnerable.
“Looking ahead, the key challenge for the market will be to balance affordability constraints with the need to support lending growth.
“While I expect modest growth over the course of the year, continued momentum will depend on further improvements in consumer confidence and greater certainty around the interest rate outlook.”