UK mortgage applications drop 18% in Q2 2026 as rates climb to 4.97%

Stonebridge’s Mortgage Market Index shows UK mortgage applications fell 18.5% year‑on‑year in the second quarter of 2026, with purchase applications down 15.5%, first‑time buyer applications down 15.7% and remortgage activity down 20.8%. Average mortgage rates rose to 4.97% from 4.49% a year earlier. The average purchase loan increased 0.57% to £236,122, while the average first‑time‑buyer loan rose 1.48% to £216,984; overall average loan size fell 1.78% to £209,932. Borrowers are shifting to shorter‑term products – two‑year fixed‑rate mortgages rose to 70% of applications, while five‑year fixes fell to 23% and variable‑rate mortgages grew to 12%.

In contrast, the June mortgage market snapshot from fintech firm Twenty7tec recorded a 7% month‑on‑month rise in total mortgage searches and a 2% year‑on‑year increase. First‑time‑buyer searches were up 9% month‑on‑month and 5% year‑on‑year, while residential remortgage searches rose 14% from May. Purchase‑related searches also returned to positive year‑on‑year growth, suggesting renewed borrower activity as lenders expand product availability, even though buy‑to‑let searches remain 14% below a year earlier.