Latest Mortgage Lenders and Administrators Statistics for Quarter 2 data from the Bank of England, have shown that low-deposit mortgages hit their highest share in 18 years.
The data also showed that the value of outstanding mortgage balances with arrears decreased by 1.9% from the previous quarter to £19.7 billion, the lowest since 2023 Q3, and was 7.3% lower than a year earlier. Whilst the outstanding value of all residential mortgage loans increased by 0.8% from the previous quarter to £1,760.6 billion, and was 3.1% higher than a year earlier
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said “The rise in the proportion of mortgages above 90% loan-to-value has reached its highest level in 18 years, showing just how vital low-deposit borrowing has become in the housing market. Saving a large deposit is a daunting task for many borrowers, so it is essential that lenders continue to adjust their affordability criteria fairly and create innovative products to help borrowers. Those who do borrow at the highest ends of the loan-to-value spectrum must be warned about the dangers of negative equity if house prices plummet, so seeking good advice and making efforts to overpay a mortgage is a wise choice.”
“Mortgages have become more costly over recent years due to higher interest rates, with a larger share of loans priced more than two percentage points above Bank Rate during Q2 2026. The chance of mortgage rates plummeting in the months ahead currently looks unlikely, and in fact, economists are mostly leaning towards the chance of a Bank Rate hike as soon as November. It is also worth pointing out that fixed rate mortgages are not tethered to the Bank of England Base Rate; they move more in tune with swap rates, which remain volatile due to wider future rate expectations.”
“The mortgage arrears figures suggest that households are widely in control of their repayments. However, circumstances can quickly change, so those borrowers who are feeling pressure due to the cost of living must speak to their lender and seek advice to avoid missing repayments. There will be many households looking to remortgage this year, and while they would have been stress tested for potential higher mortgage rates, it is still worth contacting the lender before the deal ends to assess the latest options. A product transfer could be the quickest solution, but seeking advice to navigate more choice outside of one lender before making any arrangements would be wise.”
