Mortgage lending jumped 11.1%: first-time buyers got 27.3%

You keep seeing the same headline every few weeks: mortgage lending is booming, banks are writing more loans than they have in years. And yet your mortgage in principle still doesn't stretch to anywhere near what you need, and every listing near your budget seems to vanish before you've finished reading the floor plan. That gap between the top-line numbers and what's actually happening to someone trying to buy their first home isn't you imagining it. It's in the data.

The Financial Conduct Authority's latest mortgage lending statistics, published this month, show gross mortgage advances jumped 11.1% in the second quarter of 2026 to £77.4bn, up nearly a third on a year earlier. But the share of that lending going to first-time buyers fell to 27.3%, the lowest since the first quarter of 2024 (FCA Mortgage Lending Statistics, Q2 2026, published 8 September 2026). Lending is up. Your slice of it is down. Both things are true at once, and the second one is the number that actually affects you.

Where all that extra lending is actually going

Of the 92.0% of Q2 advances that went to owner occupiers rather than landlords, the share used for remortgaging jumped 3.1 percentage points on the quarter to 31.2%, its highest level since the first quarter of 2024. Over the same period, the share going to house purchase for owner occupiers fell 1.6 points to 56.1% (FCA, published 8 September 2026). Put simply, banks are lending more overall because existing borrowers are switching deals in bigger numbers, not because more new buyers are getting through the door.

Within that shrinking purchase slice, first-time buyers took 27.3% and home movers took a larger 28.8%. That means existing owners with equity behind them, not people buying their first home, are winning the larger share of what purchase lending is available. This mirrors a pattern already visible in the Bank of England's July data, which showed net mortgage approvals for house purchase falling to 56,100 while remortgage approvals held broadly steady.

So if you've been reading "mortgage lending surges" as good news for your own chances, read the fine print first: most of that surge is banks processing people who already own a home, not people trying to buy their first one.

Credit is looser than it looks, if you can get through the door

Here's the part of the release that cuts the other way. The share of gross mortgage advances at loan-to-value ratios above 90% rose to 8.4% in Q2 2026, the highest share since 2008 Q2, and lending to borrowers with a high loan-to-income ratio (broadly, 4 times income or more on a single income, or 3 times or more on a joint income) rose to 46.0% of advances, up 4.6 percentage points on a year earlier (FCA, published 8 September 2026). Regulators are separately reviewing whether to loosen the current loan-to-income cap further, though no decision has been published.

That's a genuine loosening at the margin, and it lands directly on the kind of mortgage most first-time buyers actually need: a small deposit and a stretched income multiple. On England's average first-time buyer price of £246,000 in July 2026 (Land Registry/ONS UK HPI, published 16 September 2026), a 90% mortgage means borrowing £221,400. At today's best-buy two-year fixed rate of 4.40% (Halifax, 60% LTV, HomeOwners Alliance, checked 15 September 2026), that costs roughly £1,218 a month over 25 years. At the whole-market average two-year rate of around 5.65% (Moneyfacts, checked 8 September 2026), the same loan costs about £1,379 a month, a gap of £161 every month for not shopping around.

So if a smaller deposit has been the thing holding you back rather than your income, this is genuinely one of the better windows in nearly two decades to be a 90% loan-to-value borrower. The rate you're offered, not the lender's appetite to lend at all, is now the thing worth fighting over.

The other side of that loosening is who isn't competing for stock as hard as they were. The share of gross mortgage advances going to buy-to-let purposes fell 0.9 percentage points to 8.0% in Q2 2026, the lowest since the third quarter of 2024, and the value of outstanding mortgage balances in arrears dropped 1.9% on the quarter to £19.7bn, the lowest level since 2023 Q3 (FCA, published 8 September 2026). New possessions fell 7.1% on the quarter to 2,058. None of that is a first-time buyer statistic on its own, but fewer landlords actively borrowing to expand, alongside a mortgage book that is getting healthier rather than riskier, is a market with less competition for the same entry-level stock. So the flat or small terrace you're bidding on is less likely to have a landlord outbidding you for it than it was two years ago.

Prices are still rising, just barely, and not everywhere

The official measure backs up why lending and prices can move apart. The Land Registry/ONS UK House Price Index for July 2026, published 16 September 2026, put the average UK property at £273,000, up 1.4% annually, a slowdown from the revised 1.5% recorded for June. England's first-time buyer average rose 2.3% annually to £246,000. Regionally the picture splits hard: the North East posted the strongest annual growth at 4.9%, while London fell 3.3%.

A separate measure, the Lloyds House Price Index (formerly Halifax), told an even softer story for August 2026: its first annual fall since November 2023, down 0.4% to an average of £298,468. The two indices use different methodology (Land Registry/ONS tracks completed transactions with a lag; Lloyds is based on its own mortgage approvals), which is why they diverge, but both point the same direction: a market that has stopped running away from savers. RICS's August 2026 survey backed this up, with its price balance still negative at -28% even as buyer enquiries improved for a fifth consecutive month to -19% (RICS UK Residential Market Survey, published 7 September 2026).

So if you've been assuming prices are still sprinting ahead of your deposit, that's no longer true almost anywhere in England outside a handful of regions, and in London it's been false for over a year. Check your specific region's growth rate against your own saving rate before assuming you're losing the race.

What this means for you

The Bank of England announces its latest Bank Rate decision later today, with a Reuters poll of economists putting the odds of another hold at 3.75% at around 90%. Whatever the outcome, it won't change the pattern in this month's lending figures: credit for high-LTV, high-income-multiple borrowers is more freely available than it has been since before the financial crisis, but it's being outcompeted for by home movers with equity, and the total pool of purchase lending is shrinking as a share of the market. If you can find a 10% deposit and your income supports the multiple, the maths points toward moving now rather than waiting for headline lending growth to somehow trickle down to first-time buyers, because it hasn't yet and there's no sign it's about to.

Frankly, if you're still saving toward a 5% deposit, it's worth reading our piece on what 5% deposit mortgages actually cost you before assuming the smallest deposit is automatically the cheapest route in. And if remortgaging rather than buying is your situation, remember today's decision is exactly why so many owners are already locking in a rate before the announcement rather than waiting to see what it says. Most people who run these numbers end up concluding that the barrier now is the rate you can get, and the deposit you can raise, not whether a lender will have you at all. Budget for Stamp Duty on top of your deposit and fees before you commit to a number, so the mortgage you're approved for and the purchase you can actually afford are the same figure.