Here’s a paraphrased version in British English, divided into 15 paragraphs and slightly expanded for clarity and readability:
UK mortgage lending saw its most significant quarterly increase in five years during Q3 2025, with gross advances rising 36.9% to £80.4bn, according to the latest Bank of England (BoE) data. This represents the sharpest quarterly gain since 2020, reflecting renewed activity in the UK property market.
The total value of outstanding residential mortgages also rose, climbing 0.9% during the quarter to reach £1,733.7bn. This marks a 2.9% increase compared with the same period last year, highlighting steady growth in housing finance.
New mortgage commitments similarly saw strong growth, increasing by 1.6% to £79.4bn. This is the highest level of new commitments since Q3 2022 and 20.3% higher than in Q3 2024, demonstrating robust demand among buyers.
Higher-risk lending continued to expand during the quarter. Mortgages with loan-to-value (LTV) ratios above 90% rose by 0.3 percentage points to 7.4%, the highest level since Q2 2008, and up 0.8 percentage points compared with a year earlier.
Borrowers with elevated loan-to-income ratios also contributed to growth, with their share rising 3.3 percentage points to 44.7%. This represents the largest quarterly increase since Q3 2020, though it remains slightly below last year’s figure by 0.6 percentage points.
Activity in owner-occupier house purchases strengthened during the period. Loans for house purchases accounted for 58.6% of gross advances, up 2.5 percentage points compared with the previous quarter, although still 5.8 points lower than a year ago.
In contrast, remortgaging for owner-occupation declined slightly, falling 0.4 percentage points to 28.6%. However, it remains 5.8 percentage points higher than Q3 2024, signalling continued interest in refinancing among homeowners.
Mortgage performance indicators showed improvements across the board. Outstanding balances in arrears fell by 2.9% to £20.6bn, representing a 5.8% decrease compared with a year earlier, reflecting better overall repayment trends.
The proportion of total mortgage balances in arrears remained steady at 1.2%, 0.1 percentage points lower than the same quarter last year. This stability suggests that households are managing repayments well despite broader economic pressures.
New arrears cases accounted for 8.8% of all arrears balances, down 0.1 percentage points from the previous quarter. This level is the lowest since Q1 2022, pointing to continued resilience in mortgage repayment behaviour.
Richard Pike, chief sales and marketing officer at Phoebus Software, commented on the data, saying it highlights a mortgage market in “rude health” over the summer, with overall lending rising for the seventh consecutive quarter.
He noted that gross advances saw the largest quarterly increase in five years as borrowers took advantage of falling mortgage rates following the Bank of England’s base rate cut in August.
New mortgage commitments reaching their highest level since Q3 2020 indicate a strong pipeline for lenders heading into the remainder of the year, Pike added.
Pike also highlighted that nearly half of lending (44.7%) was to borrowers with high loan-to-income ratios, reflecting the wider availability of low-deposit mortgage products. This expansion is making homeownership more accessible but carries increased risk.
Finally, he pointed out that declining arrears rates suggest lenders are managing risk effectively and households are remaining resilient amid cost-of-living pressures. The upcoming figures will reveal how budget-related uncertainty affects borrower behaviour in the next quarter.
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