Residential house purchase lending has totalled £135bn in 2024, a rise of 11% on 2023, new figures published by UK Finance have shown.

Although the number of purchase loans in the year grew by 4%, the banking trade body warned that activity was still well below the average levels seen in the decade before 2023.

In 2025, UK Finance is expecting “gradual improvements in affordability” to drive another 10% increase in purchase lending, to £148bn.

UK Finance also suggested that remortgaging activity has been “relatively subdued” in 2024. This was, in part, due to slightly lower numbers of customers with fixed rate mortgages reaching the end of their deal periods and looking to refinance.

However, despite some cuts in offer rates and rising real wages, affordability constraints have limited the options for customers looking to refinance on the open market.

Remortgaging fell by 10% to £59bn in 2024, while internal product transfer (PT) transactions, which are not subject to affordability tests, fell by a more modest 7% to £224bn.

Next year, with more fixed rate deals coming to an end, UK Finance is forecasting growth in refinancing. The banking body expected it to grow by 30% to £76bn billion, with PT business seeing lower growth of 13% to reach £254bn.

Head of analytics at UK Finance, James Tatch, said that the mortgage market showed “greater than previously expected resilience” in 2024 as cost and rate pressures began to recede.

“Affordability constraints did impact external remortgage activity, but strong competition to retain customers meant those coming off fixed rates could find a new internal product transfer deal without needing a new affordability test,” Tatch added.

“In 2025, we are forecasting continued steady growth in both house purchase and remortgage lending as affordability improves further. We are however forecasting a slight fall in buy-to-let lending in 2025.

“The prudent underwriting standards in place for the past decade have helped most customers who might have fallen into difficultly. Arrears look to have peaked early in 2024 before falling back, and we expect them to fall again in 2025.”

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