The value of new mortgage commitments increased by 14.2% year-on-year in Q1 to £78bn, while also rising by 11.5% quarter-on-quarter, the Bank of England (BoE) has revealed.

The central bank’s latest Mortgage Lenders and Administrators Statistics found that the outstanding value of all residential mortgage loans increased by 0.7% from the previous quarter to £1.74bn, marking a 2.6% annual increase.

Furthermore, the value of gross mortgage advances decreased by 12.3% quarter-on-quarter to £69.6bn, while also falling by 10.2% on the previous year.

Outstanding mortgage balances with arrears also reached the lowest level recorded since Q3 2023, totalling £20.1bn in Q1 2026, representing a 1.7% and 6.3% quarter-on-year and year-on-year growth respectively.

Chief sales and marketing officer at Phoebus Software, Richard Pike, said the latest figures indicate a "steady start to 2026".

He stated: "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 reach 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."

The BoE revealed that the share of gross mortgage advances with LTV ratios exceeded 90% dropped by 0.3 percentage points (pp) from the previous quarter to 8%, which is the first decrease since Q4 2024.

The share of gross mortgage advances for buy-to-let purposes increased by 0.5 pp in the quarter to 8.9%, while the share of gross advances for house purchase for owner occupation dropped by 3.9pp to 8.9% in Q1.

Chief executive at Stonebridge, Rob Clifford, said that the “wild swings” in the numbers in the latest data are “just a mirage”.

He concluded: "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. 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."

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