• Mortgage lending grew strongly in 2025, rising by over 16 per cent to its highest level since 2021. Refinancing also increased in the second half of the year after a slow start, as customers delayed securing a new deal until rates fell later in the year.
• The revision of lending rules by the Financial Conduct Authority (FCA) in July widened access to mortgage credit but stretched affordability remains a challenge, with first‑time buyers spending over 22 per cent of their gross income on initial repayments in Q4.
• Savings into longer‑term products continued to rise in Q4 with deposits in Cash ISAs up 15 per cent in December compared to the same month in 2024, and notice accounts up 10 per cent. Overdraft and credit card data showed households were managing borrowing well, with few signs of financial difficulty.
• The number of mortgages in arrears continued to fall in Q4 2025 to 90,050, the seventh consecutive quarter of contraction. 

Mortgage lending and refinancing

Overall, 2025 was a year of growth for the mortgage market. The number of mortgages for house purchase grew by 16.3 per cent to reach 720,000 loans, the highest number since the pandemic. Activity in the first quarter was boosted by borrowers looking to beat the changes to stamp duty in April 2025, while the remainder of the year saw lending return to just above standard levels.

The mortgage market saw innovation through 2025 with new products enabling more first-time buyers (FTBs) to get on the property ladder. 391,000 FTB loans were granted in 2025, up from 332,000 in 2024.

Refinancing activity strengthened in the second half of the year. 511,000 loans were advanced in Q4 – up 25 per cent on the same quarter in 2024, with internal product transfers remaining the most popular choice for those looking to refinance.  More customers are set to come off fixed-rate mortgages this year, and we expect this to drive further growth in overall refinancing.

Mortgage affordability

The easing of mortgage lending rules by the FCA in July allowed more people to access mortgage credit, but stretched affordability will limit borrowers in 2026. First‑time buyers were typically spending 22.1 per cent of their gross income on initial mortgage payments in Q4, close to the peak levels seen in 2023.

Arrears and possessions

As previously announced, the number of mortgages in arrears continued to fall in Q4 2025 to 90,050, the seventh consecutive quarter of contraction. Meanwhile, there was an expected dip in possessions in Q4 due to the industry’s voluntary pause on possessions over the holiday period. 

Consumer savings and borrowing

The number of people investing in longer-term savings products, including Cash ISAs and notice accounts, continued to grow in Q4, increasing by 15 per cent and ten per cent respectively. 

Overdraft debt remained at historically low levels, despite a seasonal increase in Q4, with 25 per cent of overdraft facilities only being used once or occasionally. Only two per cent of overdrafts showed any sign of financial difficulty, showing households are not turning to overdraft debt to cope with financial strain.

Credit card usage grew in line with long‑term trends, with consumers using credit cards as a convenient method of payment rather than as a tool to manage debt. In Q4, only 47.6 per cent of card balances had outstanding interest payments. Balance transfers accounted for four per cent of credit card lending, down from 11 per cent in Q2.

Lender support for borrowers

Banks and other finance providers are ready to support customers facing financial difficulty. They will work with you if you are worried about paying your mortgage, credit card or personal loan. More information can be found here.

View the full Household Finance Review data here.

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 first‑time buyer numbers supported by innovative products to widen access. Affordability remains tight despite regulatory easing, but the continued fall in arrears is reassuring, and gradually easing rates should help support borrowers in the year ahead.”

“Household savings continued to grow in the final quarter of 2025, while credit card balances with interest remained at record lows, with consumers increasingly using credit cards for ease and convenience rather than to manage financial pressures.