Mortgage market surge in January fails to match last year’s boom

The UK mortgage market roared back to life in January, with mortgage searches soaring compared to December 2024, latest data from Twenty7tec reveals.

However, despite the strong rebound, activity remained significantly below the highs recorded in January 2024, raising questions about the market’s long-term momentum.

Purchase mortgage searches surged by 85.07% and remortgage searches climbed 82.64% compared to the traditionally sluggish December period.

FIRST-TIME BUYERS

First-time buyer activity also experienced a dramatic uptick, jumping 91.44% month-on-month.

Yet, in a year-on-year comparison, the market showed clear signs of cooling. Overall purchase mortgage searches were down 7.87%, while remortgage searches slumped 22.23% versus January 2024.

Buy-to-let activity mirrored this trend, with purchase and remortgage searches falling 14.14% and 17.29%, respectively.

The data suggests a clear shift in borrower preferences. Demand for 2-year fixed mortgages softened, accounting for 41.13% of all fixed product searches, compared to 49.51% in January 2024.

Conversely, searches for longer-term fixed products rose, with 3- to 5-year fixed mortgages making up 35.73% of searches (up from 31.04%) and 5- to 10-year fixes increasing to 23.14% (from 19.45%).

STRONG ENGAGEMENT

Despite lower search volumes overall, Twenty7tec reported strong engagement in certain key areas. APPLY mortgage submissions climbed 17% year-on-year, even as mortgage illustrations dropped by 16%.

This marks the third busiest month for the firm since January 2022. Meanwhile, affordability tools saw record-breaking usage, with a 28% increase over the previous high, highlighting advisers’ growing reliance on technology in assessing client eligibility.

SEARCHES NEARLY DOUBLED

Nathan Reilly (main picture), director at Twenty7tec, said: “January was definitively busier than December – in some cases, mortgage search volumes nearly doubled compared to the prior month. Yet it fell short of the major highs that we saw in January 2024, which really set the tone for the year to come.”

Reilly attributed December’s lull to the holiday period and the pre-Christmas interest rate decision, suggesting January’s rise was driven by pent-up demand.

However, he pointed to a notable shortfall in self-employed mortgage activity, down 11.6% compared to January 2024.

He added: “We usually expect to see more movement from self-employed borrowers at this time of year as they assess their financial standing post-tax year, but that simply wasn’t the case this January.”