Mortgage lending returned to growth in the third quarter of 2025, according to the latest UK Finance Household Finance Review, offering encouraging news for prospective homebuyers despite ongoing affordability pressures.
With all the flurry and bluster around the Autumn Budget announced a fortnight ago (26 November), it's very easy to think that all might be a little gloomy on the financial side of things at the moment.
Certainly, the latest figures in the House Price Indices from various financial institutions such as Halifax and Nationwide seem to indicate a slowing market trend for housing in general, particularly as we approach the Christmas period when the housing market typically quietens. The speculation about what was - and what wasn't - in the Budget made for uncertainty about whether investing in something as large as a new home is wise right now.
However, UK Finance, the financial services trade association, has highlighted that not everything is doom and gloom with the publication of its latest Household Finance Review for the third quarter of 2025. The report examines trends in household spending, saving and borrowing.
Key findings from the Q3 2025 mortgage report
The report reveals several important trends for homebuyers and those considering remortgaging:
Mortgage lending recovers
Borrowing for buying a home returned to its 2022 levels in the third quarter, despite what UK Finance refers to as "material affordability challenges". This recovery follows the April 2025 stamp duty changes, when first-time buyers were hit by the return of higher tax thresholds after a late surge in purchases to take advantage of the previous beneficial levels.
Remortgaging activity increases
Refinancing or remortgaging also showed recovery in the year following a sluggish start. Most borrowers took advantage of the ease and speed of transferring to products with the same lender (product transfers), which accounted for the majority of this type of lending.
Affordability remains tight
UK Finance notes that affordability continues to be constrained. For first-time buyers, loan repayments account for 22% of monthly household income - the highest percentage for nearly 20 years.
Regulatory changes widen access
However, regulation changes in 2025 have assisted access by expanding availability of borrowing products. The UK Finance report highlights additional adjustments to help underserved borrowers, such as the self-employed, but without driving unsustainable demand levels.
The Financial Conduct Authority (FCA), which oversees regulation of the financial sector, has recently published its Mortgage Rule Review, which generated discussion regarding the possibility of further adjustments to lending rules to support wider homeownership.
Household savings continue to grow
For the average household, UK Finance notes that savings are growing but at a slower rate than they have been. This has been helped by precautionary saving because of the uncertainty generated in the broader economy.
What is remarkable about this analysis is that savings are still increasing despite the slowing of average wage growth and lower rates for those starting a savings account.
Eric Leenders, Managing Director of Personal Finance at UK Finance, said of the report:
"Mortgage lending returned to growth in the third quarter after a quieter start to the year, while refinancing also increased as more customers rolled off fixed-rate deals.
Affordability remains tight, but recent regulatory adjustments are helping widen access at the margins, and the FCA's review raises important questions about how rules could be adapted to support underserved groups such as the self-employed.
Savings growth has moderated but remains strong by historic standards, with households continuing to build precautionary buffers against an uncertain economic backdrop ahead of the Autumn Budget."
What this means for homebuyers
For those planning to buy in the neart future, these findings offer reassurance that mortgage products remain available and accessible, even while general affordability is more constrained than it has been in recent years.
If you are thinking of buying your next home and selling the one you have now, or especially if you areconsidering buying your first home, there are deals to be had. It would be a good idea to talk to an expert since they will have all the information to help you navigate current market conditions.
Get expert conveyancing support for your property purchase
Homeward Legal provides fixed-price conveyancing quotes with no hidden fees - what you're quoted is what you pay. Our conveyancers start work as soon as you appoint them, and we operate a 'no completion, no fee' promise for your protection.
Call to get your conveyancing quote started, or get a quick quote using our online quote generator.