Stonebridge, one of the UK’s largest mortgage networks, has published its latest Mortgage Market Briefing, drawing on data from its national adviser network, which completed more than £12 billion of lending last year.

The November figures show the average loan size increased by 3.5% to £207,929, while the number of mortgage applications was 11.6% higher than in the same month last year.

Average mortgage rates also continued to ease, falling by 39 basis points month on month to 4.35%.

Rob Clifford, chief executive of mortgage and protection network Stonebridge, said: “The fact that mortgage applications are up 11.6% year-on-year in November, despite a range of economic headwinds, demonstrates that the mortgage market continues to display notable resilience.

“Much of this growth has been fuelled by falling mortgage rates, which are 39 basis points lower than they were a year ago, on average, making borrowing more affordable and attractive to prospective buyers but also those wondering whether to refinance or not.

“Markets have already priced in another two-to-three cuts over the coming 12 months, which should theoretically limit the scope for mortgage rates to fall much further. However, lenders are competing hard at present, which is likely to apply additional downward pressure on rates and provide extra momentum for the market.

“Now that the uncertainty surrounding the Autumn Budget is behind us, buyers are expected to feel more confident, helping to unblock activity that may have been held back in recent months.”

FIXED vs VARIABLE

Stonebridge’s data shows fixed rate mortgages remain the overwhelming choice for borrowers, with around 95% opting for them, broadly unchanged from November last year.

Clifford said: “Fixed rate mortgages remain by far the most popular choice for borrowers, with around 95% opting for them – essentially unchanged from November last year. This continues to reflect a strong preference for repayment certainty, particularly in a market that has experienced recent volatility in rates.

“The current pattern also suggests borrowers are taking a cautious, hedging approach. While rates are widely expected to fall in the months ahead, nothing is guaranteed. Therefore, the popularity of fixed rate deals likely reflects that sense of uncertainty among borrowers.

“Variable rate deals continue to account for only a small minority of choices. While they could offer upside if rates fall further, the overwhelming dominance of fixed rates highlights that most borrowers prefer the security and predictability of known repayments, reflecting a measured approach to mortgage decisions in an uncertain environment.”

PRODUCT LENGTH PREFERENCE

The briefing also highlights a growing preference for shorter-term fixed rates, despite the broader downward trend in mortgage pricing.

Clifford said: “While mortgage rates have been falling over the past year, borrowers are increasingly reluctant to lock in for the longer term, instead preferring shorter-term fixed rates.

“It’s clear that borrowers crave short-term stability at a time of continued uncertainty but also want to give themselves space to manoeuvre should rates fall in a year or two’s time.

“With markets now anticipating additional rate cuts over the coming months, things can change quickly, as we’ve seen in the past. So it seems borrowers are adopting a cautious approach.

“In other words, they are hedging their bets, opting for short-term certainty with medium-term flexibility, rather than committing immediately to a longer-term fix in what remains an uncertain environment.”

REPAYMENT vs INTEREST-ONLY

The split between repayment and interest-only borrowing has remained broadly stable, with interest-only loans accounting for around one in five mortgages.

Clifford said: “The split between repayment and interest-only mortgages has remained largely unchanged over the past year, with interest-only loans continuing to account for roughly one in five mortgages. These deals tend to be taken out by borrowers with higher incomes, significant bonuses, or clear repayment strategies in place, such as the sale of a second property.

“However, we could see interest-only becoming a more viable option for a wider selection of borrowers if the Financial Conduct Authority changes its rules to allow the sale of property as a suitable repayment vehicle.

“Such a change could make these loans a more popular and accessible option for a greater number of borrowers. For now, however, the data suggests that the majority of borrowers remain focused on traditional repayment structures, prioritising certainty and gradual debt reduction.”

PURCHASE AND REMORTGAGE ACTIVITY

Refinancing activity continues to dominate overall mortgage volumes, reflecting the large number of fixed-rate deals reaching maturity.

Clifford said: “This year has been particularly strong for refinancing, driven by the fact that a large volume of fixed-rate loans are coming up for renewal. As a result, remortgages and product transfers continue to make up the majority of activity, accounting for nearly two thirds of cases in November.

“While this may give the impression that purchase lending is weak, that is not the case. In fact, purchase activity has been stronger in almost every month this year compared with the same month in 2024. It is simply the sheer number of maturing loans that has skewed overall activity towards refinancing.

“Looking ahead, next year is also expected to be strong for remortgages, as borrowers continue to take advantage of more attractive rates and competitive deals. If the Bank of England delivers the anticipated two-to-three rate cuts over the coming months, we could see even more borrowers refinancing, further supporting overall market activity.”

AVERAGE LTV

Average loan-to-values edged up slightly in November to 59%, reflecting modest changes in the composition of mortgage activity.

Clifford said: “Average loan-to-values rose slightly in November, reaching 59%, marking a modest increase compared with recent months. While the change is small, it likely reflects subtle shifts in the mix of mortgage activity rather than any dramatic change in borrowing behaviour.

“Much of the rise can be attributed to the composition of the market. First-time buyers, who typically have smaller deposits and therefore higher LTVs, continue to be active. At the same time, the bulk of cases this year has been refinancing, where LTVs tend to be lower, which helps explain why overall movements remain modest.

“Looking ahead, with mortgage rates having eased, we expect purchase activity to strengthen next year. This could support greater first-time buyer engagement and potentially lead to a further, gradual increase in average LTVs, reflecting both increased borrowing and cautious optimism among buyers entering the market.”