"It looks like a contraction and an expansion at the same time if you look at what happened to lending and new commitments in the first quarter, but these wild swings in the numbers are really just a mirage"
- Rob Clifford - Stonebridge Mortgage and Protection Network
New mortgage commitments rose 11.5% quarter-on-quarter to £78bn in Q1 2026, reaching a level 14.2% higher than a year earlier, according to Bank of England mortgage market data. The figures arrive alongside a 12.3% quarterly fall in gross advances to £69.6bn, a combination that has prompted industry figures to urge caution when reading the headline numbers.
The total outstanding value of residential mortgage loans increased 0.7% from the previous quarter to £1,746.1bn, and was 2.6% higher year-on-year. Arrears continued to ease, with outstanding balances in arrears falling 1.7% to £20.1bn, the lowest level since Q3 2023. As a proportion of all outstanding balances, arrears held steady at 1.1%, down 0.1 percentage points year-on-year.
Within the advance mix, the remortgage share for owner-occupiers rose 2.7 percentage points quarter-on-quarter to 28.1%, up 6.8 percentage points on the year. The buy-to-let share edged up 0.5 percentage points to 8.9%, also higher than a year earlier. The share of advances for owner-occupier house purchase fell 3.9 percentage points to 57.7%, and was 8.6 percentage points lower year-on-year.
On pricing, the share of gross advances carrying interest rates less than 2% above Bank Rate slipped 0.2 percentage points to 94.7%, the lowest reading since Q1 2023. High loan-to-value lending also retreated slightly, with the share of advances at LTV ratios above 90% dropping 0.3 percentage points to 8.0%, though that figure remains 1.4 percentage points above its level a year ago.
Rob Clifford, chief executive of Stonebridge Mortgage and Protection Network, noted: "It looks like a contraction and an expansion at the same time if you look at what happened to lending and new commitments in the first quarter, but these wild swings in the numbers are really just a mirage.
"Ignoring the annual figures this time around is the only way to take the temperature of the market, all thanks to a distortion last year. A stamp duty cliff edge had caused a rush of applications and lending, creating both flattering and unflattering year-on-year comparisons.
He added, "However, there's still plenty of momentum out there. In fact, despite the invasion of Iran in February, new mortgage approvals are holding their own and were up significantly the very next month, also rising year on year. Even if the unresolved situation in the Middle East and rising borrowing costs does dent new home purchases, we're still in the midst of a remortgaging wave due to a pandemic boom in transactions five years ago, and this will smooth out the effect of any volatility for advisers who position themselves well in the coming months."
Richard Pike, Chief Sales and Marketing Officer at Phoebus Software, said: “The Bank of England’s latest figures indicate the mortgage market made a steady start to 2026. The fall in gross mortgage advances shows the market was still weak at the start of the year, but the rise in commitments shows that confidence was picking up in Q1 before the market shocks caused by the Iran conflict.
“There was a continued shift towards remortgaging as a significant number of borrowers reached the end of fixed-rate deals. This will remain a defining feature of the market throughout the year, as households continue to adapt to a higher rate environment.
“Encouragingly, arrears continue to trend downwards, and are at their lowest since Q3 2023, highlighting the resilience of borrowers despite ongoing affordability pressures. This will provide reassurance to lenders that, while cost pressures persist, most customers are managing to stay on top of their repayments.
“We saw a gradual increase in possession activity, although the numbers remain lower than last year. While I don’t believe it's cause for alarm, it’s important that lenders remain vigilant and ensure their servicing teams are equipped to support those customers who may still be vulnerable.
“Looking ahead, the key challenge for the market will be balancing affordability constraints with the need to support lending growth. While I expect to see modest growth over the course of the year, sustained momentum will depend on further improvements in consumer confidence and greater certainty around the interest rate outlook.”
The remortgage trend is likely to be a central theme for brokers over the coming quarters. With a wave of fixed-rate deals originated during the pandemic transaction boom now rolling off, demand for remortgage advice is expected to remain elevated, providing a degree of insulation against any softening in purchase activity.
