The UK mortgage market opened 2026 with a mixed picture. Total outstanding residential mortgage balances continued to rise, while actual lending weakened compared with the previous quarter.

At the same time, new mortgage commitments increased sharply, suggesting that more lending may be in the pipeline for the coming months.

The figures also show changes in loan-to-value ratios, refinancing a mortgage activity and arrears, giving a broader view of how borrowers are responding to current market conditions.

Outstanding Mortgage Debt Increased

The total value of residential mortgage loans outstanding reached £1,746.1 billion in the first quarter of 2026. That represented a 0.7% increase from the previous quarter and a 2.6% rise compared with the same period a year earlier.

The gradual increase continues a trend seen through much of 2025, when outstanding balances moved from £1,702.4 billion in the first quarter to £1,734.4 billion by the fourth quarter. While the overall mortgage stock grew, the amount of new money actually advanced to borrowers moved in the opposite direction.

Gross Lending Fell Sharply

Gross mortgage advances fell to £69.6 billion during the first quarter. That was 12.3% lower than in the previous quarter and 10.2% below the level recorded a year earlier. The fall is particularly noticeable when compared with the third and fourth quarters of 2025, when gross advances reached £80.4 billion and £79.4 billion respectively. The figures suggest that mortgage completions slowed considerably at the beginning of the year, despite the overall value of outstanding loans continuing to rise.

However, one part of the data points toward potentially stronger lending activity later in 2026.

New Commitments Moved Higher

New mortgage commitments increased to £78.0 billion. These commitments represent lending that has been agreed but is expected to be advanced in the coming months.

The value was 11.5% higher than in the previous quarter and 14.2% above the level seen a year earlier. This creates an interesting contrast: completed lending fell, while agreed future lending increased. If more of those commitments progress to completion, mortgage activity could strengthen in later quarters.

High-LTV Lending Eased

The proportion of gross mortgage advances with loan-to-value ratios above 90% fell by 0.3 percentage points to 8.0%. It was the first decline in this share since the final quarter of 2024, although the figure remained 1.4 percentage points higher than a year earlier.

Loans with LTV ratios above 95% accounted for 0.5% of advances, unchanged from the previous quarter. Meanwhile, the total share of lending with LTV ratios above 75% declined from 46.9% to 45.9%. These figures suggest a modest shift away from the highest loan-to-value lending during the quarter.

Borrowing Relative to Income

The share of lending going to borrowers with high loan-to-income ratios also decreased. Overall, high-LTI lending fell by 1.3 percentage points to 45.1%, leaving it close to the level recorded a year earlier.

Among single-income borrowers, however, the proportion receiving loans at four times income or more increased to 12.1%. That was the highest level since the second quarter of 2021. For joint-income borrowers with an LTI ratio of three or above, the share fell to 33.0%.

Remortgaging Became More Important

The purpose of mortgage lending also changed noticeably. Owner-occupiers accounted for 91.1% of gross advances, while buy-to-let lending increased to 8.9%, up 0.5 percentage points from the previous quarter.

Within owner-occupier lending, remortgages rose strongly. Their share increased by 2.7 percentage points to 28.1%, which was 6.8 percentage points higher than a year earlier. By contrast, lending for home purchases by owner-occupiers fell to 57.7%.

That was 3.9 percentage points below the previous quarter and 8.6 percentage points lower than a year earlier. First-time buyers accounted for 27.4% of gross advances, while home movers represented 30.3%. Both shares declined during the quarter.

Mortgage Arrears Improved

There was more encouraging news in the figures on mortgage arrears. Outstanding mortgage balances in arrears fell by 1.7% from the previous quarter to £20.1 billion. That was the lowest level since the third quarter of 2023 and 6.3% lower than a year earlier.

Mortgages in arrears represented around 1.1% of all outstanding mortgage balances, broadly unchanged from the previous quarter. New possession cases increased slightly to 2,216 during the quarter, but remained 4.3% lower than a year earlier. The total stock of possessions fell by 0.8% to 9,247, marking the first quarterly decline since early 2021.

A Mixed Start to 2026

The first-quarter figures show a mortgage market moving in several directions at once.

Actual lending weakened, yet future commitments increased. Remortgaging became more prominent, while the share of lending used for home purchases declined. At the same time, mortgage arrears continued to improve.