UK High-LTV Mortgage Lending Hits Highest Share Since 2008 as Advances Jump 31.7%

UK mortgage lending at loan-to-value ratios above 90% accounted for 8.4% of gross advances in the second quarter of 2026, the highest share since Q2 2008, as the overall value of mortgage advances rose sharply from a year earlier.

Gross mortgage advances reached £77.4 billion, up 11.1% from the first quarter and 31.7% from Q2 2025, according to the FCA/PRA Q2 mortgage lending statistics published on September 8. New mortgage commitments, which measure lending agreed to be advanced in the coming months, increased 1.4% from the previous quarter to £79.2 billion and were only 1.3% higher than a year earlier. The Mortgage Lending and Administration Return data are not seasonally adjusted.

Higher-LTV lending took a larger share of advances, but the release does not establish why the mix shifted. The figures also distinguish money actually advanced during the quarter from commitments for future lending, with the former recording a much stronger year-over-year increase.

Higher-LTV loans take a larger share of advances

Loans above 90% LTV rose by 0.4 percentage points from Q1 and by 1.4 percentage points from a year earlier to 8.4% of gross advances. Mortgages above 95% LTV remained at 0.5% of advances from the previous quarter, although that share was 0.2 percentage points higher than a year earlier. For borrowers, an LTV above 90% generally means the mortgage covers more than nine-tenths of the property’s value, leaving a deposit or existing equity position of less than 10% at origination.

Across a broader cutoff, mortgages above 75% LTV accounted for 47.5% of gross advances, up 1.5 percentage points from Q1 and 4.2 percentage points from a year earlier. That was the highest share since Q4 2007. The proportion of lending to borrowers classified by the FCA as having a high loan-to-income ratio also rose to 46.0%, up 0.9 percentage points from the prior quarter and 4.6 percentage points from a year earlier.

Those figures are measures of the mix of new lending, not measures of defaults or borrower performance. The same release shows that first-time-buyer house purchases accounted for 27.3% of gross advances, down 0.1 percentage points from both the previous quarter and a year earlier and the lowest share since Q1 2024. That makes it difficult to treat the rise in high-LTV lending as simply a first-time-buyer story. Home movers accounted for 28.8% of gross advances, with the two groups together making up the 56.1% share advanced for owner-occupier house purchases.

Gross advances rebound more sharply than new commitments

At £77.4 billion, Q2 gross advances compare with £69.6 billion in Q1 2026 and £58.8 billion in Q2 2025. The year-over-year increase therefore comes against a much lower base in the same quarter last year. In Q1 2025, gross advances had been £77.6 billion, close to the latest quarterly total. Because the MLAR series is not seasonally adjusted, quarter-to-quarter comparisons should also be read with seasonal patterns in mind.

Forward-looking commitments were steadier. New commitments rose to £79.2 billion from £78.1 billion in Q1 and £78.2 billion a year earlier. Their 1.3% annual increase was far smaller than the 31.7% rise in gross advances. The data do not say that the gap will persist, but they show that lending already advanced accelerated much more strongly than the amount newly committed for the coming months during this reporting period.

Remortgaging took a larger share of lending. Owner occupiers accounted for 92.0% of gross advances, while buy-to-let fell to 8.0%, the lowest share since Q3 2024. Owner-occupier remortgages accounted for 31.2% of gross advances, up 3.1 percentage points from Q1 and the highest share since Q1 2024. Owner-occupier house purchases accounted for 56.1%, down 1.6 percentage points from the previous quarter but still 0.1 percentage points above the year-earlier share. Total outstanding residential mortgage balances reached £1,760.6 billion, up 0.8% from the previous quarter and 3.1% from a year earlier.

Arrears and possessions fall in Q2

Separately, the aggregate arrears measures reported for Q2 improved. Outstanding mortgage balances with arrears fell 1.9% from the previous quarter to £19.7 billion, the lowest since Q3 2023, and were 7.3% below a year earlier. Arrears represented 1.1% of total outstanding mortgage balances, unchanged from Q1 and 0.1 percentage points lower than a year earlier.

Possession figures also moved down during the quarter. The number of new possessions fell 7.1% from Q1 to 2,058 and was 15.6% lower than a year earlier. The total stock of possessions declined 4.5% from the previous quarter to 8,825, the largest quarterly decrease since Q1 2021, although the stock was still 1.7% higher than a year earlier. These arrears and possession figures describe the wider mortgage book, so they should not be read as a performance measure specifically for the newest high-LTV loans.

Outside the quarterly MLAR release, HM Land Registry’s latest UK House Price Index put the average UK home at £272,000 in June, up 2.0% from a year earlier, with annual price growth slowing from 3.0% in May. The Bank of England’s July Money and Credit release then showed net mortgage approvals for house purchases falling to 56,100 from 58,200 in June, while the effective interest rate on newly drawn mortgages rose to 4.45% from 4.35%.

A new quarterly Mortgage Lending and Administration Return release is scheduled for December 8. Until then, the monthly Bank of England data will provide a more current read on approvals, gross lending and mortgage rates after the sharp Q2 increase in advances.