The UK mortgage market is expanding at a record pace, presenting both opportunities and challenges for lenders. As mortgage balances continue to rise, the ability to process applications efficiently, assess risk accurately, and maintain compliance has never been more critical.

According to the latest Bank of England mortgage statistics, the total value of outstanding residential mortgage loans rose to £1,678.2 billion in Q4 2024, marking the highest level recorded since data collection began in 2007. This represents a 0.5% increase from the previous quarter and a 1.32% rise from 2023. 

What Does This Mean for Lenders?

Rising mortgage balances reflect strong borrower demand, creating opportunities for lenders to expand their portfolios. However, increased lending volumes also demand greater efficiency, robust affordability checks, and strict regulatory compliance to ensure responsible lending.

The Unique Risk of First-Time Buyers

One of the most notable trends in the expanding mortgage market is the growing proportion of first-time buyers. In Q4 2024, first-time buyers accounted for 29.6% of total new lending, and over the year, their share increased by 3.8%.

While this increase presents opportunities for lenders, it also introduces unique credit risks that must be carefully managed.

First-time buyers typically face:

  • Limited credit history, making risk assessment more challenging.
  • Smaller deposits, which increase loan-to-value (LTV) ratios, raising risk exposure for lenders.
  • Lower financial resilience, making them more vulnerable to financial shocks.

Given these factors, lenders must ensure that first-time buyers can manage repayments sustainably without increasing exposure to default risk. 

In a high-demand market, managing this effectively requires a scalable, data-driven approach to decision-making.

The Role of Technology in Modern Lending

Technology is reshaping mortgage lending, helping lenders handle higher volumes, assess risk more accurately, and ensure compliance in an evolving market.

As the mortgage market becomes increasingly complex, traditional credit checks alone may not provide a complete picture of a borrower's financial position. To ensure more accurate and efficient lending decisions, lenders must integrate real-time financial data and affordability insights into their decision-making processes.

By leveraging decisioning and data solutions, lenders can achieve:

Key Benefit

How It Helps
Faster Approvals Reduces manual work and speeds up decisions
Improved Assesments Uses real-time data for more accurate lending decisions
Better Risk Management Supports complex cases, including self-employed and multi-applicant mortgages
Regulatory Compliance Enables quick adaptation to changing FCA regulations

 

As the mortgage market grows, lenders need efficient, accurate, and compliant decisioning. LendingMetrics’ ADP offers a fully customisable decision engine, with a no-code interface for easy rule changes, and data orchestration from 150+ sources, including CRAs, Open Banking, and Fraud Protection.

Want to see how our solutions can transform your lending process? Get in touch today to learn more.