New mortgage commitments increased in the first quarter of 2026 even as completed lending activity slowed, according to the latest figures from the Bank of England.

The Bank’s Mortgage Lenders and Administrators Statistics showed the value of new mortgage commitments rose by 11.5% on the previous quarter to £78 billion and was 14.2% higher than a year earlier.

However, the value of gross mortgage advances fell by 12.3% quarter-on-quarter to £69.6 billion and was 10.2% lower than the same period in 2025, suggesting that while demand was improving, completed transactions remained subdued at the start of the year.

The outstanding value of all residential mortgage loans increased by 0.7% over the quarter to £1.746 trillion and was 2.6% higher than a year earlier.

The data also highlighted a continuing shift towards remortgaging. The share of gross mortgage advances for owner-occupier remortgages rose by 2.7 percentage points over the quarter to 28.1%, while the share for house purchase fell by 3.9 percentage points to 57.7%.

Buy-to-let activity also strengthened, with the proportion of gross advances for buy-to-let purposes increasing by 0.5 percentage points to 8.9%.

Meanwhile, the value of outstanding mortgage balances in arrears fell by 1.7% over the quarter to £20.1 billion, the lowest level since the third quarter of 2023. The proportion of outstanding balances in arrears remained broadly stable at 1.1%.

STEADY START

Richard Pike, chief sales and marketing officer at Phoebus Software, said: “The Bank of England’s latest figures indicate the mortgage market made a steady start to 2026.

“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.

“We saw a gradual increase in possession activity, although the numbers remain lower than last year. While I don’t believe its cause for alarm, it’s important that lenders remain vigilant and ensure their servicing teams are equipped to support those customers who may still be vulnerable.

“Looking ahead, the key challenge for the market will be balancing affordability constraints with the need to support lending growth. While I expect to see modest growth over the course of the year, sustained momentum will depend on further improvements in consumer confidence and greater certainty around the interest rate outlook.”

WILD SWINGS ‘JUST A MIRAGE’

Rob Clifford, chief executive of Stonebridge mortgage and protection network, said the quarterly movements should be viewed in the context of market distortions created by last year’s stamp duty changes.

He said: “It looks like a contraction and an expansion at the same time if you look at what happened to lending and new commitments in the first quarter, but these wild swings in the numbers are really just a mirage. 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.”