Mortgage refinancing rose 28% year-on-year in the second quarter of 2026, according to UK Finance’s Household Finance Review. The quarter saw 529,750 refinancing transactions, driven mainly by borrowers coming to the end of fixed-rate deals. Product transfers made up 81% of those transactions.
Around 900,000 residential mortgages were due to reach the end of their deal rates during Q2 2026. UK Finance said roughly half of those refinancing were expected to be borrowers coming off five-year fixed-rate mortgages taken out in 2021, when rates were at historic lows.
Borrowers facing the largest rate increases when remortgaging were still spending about 5% less of their income on repayments than those taking out a new mortgage. However, affordability for first-time buyers reached its most stretched level since 2008. In June, first-time buyers’ initial mortgage repayments averaged 22.6% of their gross income.
UK Finance said affordability was likely to remain difficult over the coming months because of continued economic uncertainty. It proposed easing regulatory limits on mortgages offered at high loan-to-income ratios, raising the threshold from 4.5 times a borrower’s income to five times that income. The change could increase lending capacity for creditworthy first-time buyers without materially increasing risk, the organisation said.
UK Finance did not expect refinancing to cause serious affordability problems overall, but advised worried borrowers to contact their lenders as soon as possible.
James Tatch, principal of analytics at UK Finance, said: “First-time buyers are facing the greatest affordability pressure since 2008, as higher mortgage rates mean repayments absorb a larger share of their income.
“By contrast, most borrowers refinancing have already repaid part of their mortgage and benefited from income growth since they first took out their loan, helping to limit the effect of higher rates.
“We do not expect remortgaging to create widespread affordability problems, but anyone worried about their payments should contact their lender as early as possible to discuss the support available.”
