Will 2025 Be a Big Year For Mortgages?

If you’re considering getting a mortgage in 2025, you might wonder what’s on the horizon. The market is buzzing with activity, and whether you’re thinking of moving home in the next twelve months, a first-time buyer ready to make the leap onto the property ladder, or your existing mortgage deal is coming to an end, this year holds a lot of possibilities—and challenges. 

So, let’s break all this down. 

Where Are Interest Rates Headed in 2025?

Interest rates are still the hottest topic when it comes to mortgages. The good news is several market experts are predicting that, after just two base rate cuts in 2024, down to 4.75%, the Bank Of England will look at more reductions in 2025, with possibly as many as four quarter percent (0.25%)* cuts, bringing the base rate down to 3.75% by year-end. 

*Source: Morningstar

This is great news for anyone looking to get a mortgage or remortgage, as lower rates mean more affordable monthly repayments. However, while rates are expected to decrease, the pace may be gradual. 

The key factor here will be inflation and whether it keeps stubbornly above the government’s target of 2%. If it can be kept below this level (it currently stands at 2.5%*), this should be the green light the Central Bank has been waiting for to bring rates down. 

*Source: Office for National Statistics (ONS)

Will People Borrow More in 2025?

Yes, it’s possible. UK Finance** predicts mortgage borrowing will increase by about 11% this year, reaching £260 billion. And some estimates, like those from the Intermediary Mortgage Lenders Association (IMLA), are even more optimistic, forecasting £275 billion in lending—a 16% jump.

Why the rise? 

It’s partly because wages are starting to grow faster than inflation, which makes things a little easier for households. More people are beginning to feel confident about buying or moving home, and house prices have steadied in many areas. This combination creates a sweet spot for borrowing.

Lenders are also fighting harder for your business. Competitive deals are out there, but not necessarily from the usual suspects. If you’re in the market for a mortgage, now’s a good time to see what’s available, and using the services of an experienced mortgage broker will help save you time and, potentially, some money, too. 

What About Remortgaging?

If you’re already a homeowner, remortgaging is where things get interesting in 2025. With many fixed-rate deals from the low-interest era of the 2010s coming to an end, lots of people are scrambling to lock in new deals. 

UK Finance** has suggested that remortgaging could increase by 30% this year, reaching £76 billion for external deals. If you count internal product transfers—when you stick with your current lender but switch to a new deal—that figure jumps to £254 billion.

So why all the activity? For one, those old, super-low fixed rates are history. People who locked in deals under 2% are now facing rates closer to 4.5-5%*. It’s a tough pill to swallow, but finding the right remortgage deal can make a big difference in keeping monthly payments manageable.

*Source: Moneyfactscompare.co.uk 

Lenders know this and are stepping up with a wider range of deals for variable or fixed rates across shorter and longer terms. Whether you want stability or flexibility, there’s a product out there for you and using a mortgage broker to help you compare your options could be a shrewd move. 

**Source: UK Finance

What Does It All Mean for You?

2025 is shaping up to be a big year for the UK mortgage market, but it’s not without its challenges. Interest rates are still high compared to those available before the COVID-19 pandemic, but if you’re prepared and know where to look, there are opportunities to make your money work harder.

If you’re a first-time buyer, this might be the year to take advantage of the various schemes available, such as Shared Ownership or First Homes. For homeowners, remortgaging could be the key to protecting your finances as deals expire and lower rates become scarce. 

The mortgage market doesn’t have to feel overwhelming. With some planning and the right advice from a broker who understands how the market can change - like us! - 2025 could be the year you take control of your mortgage journey.

If you want to talk to an expert about your mortgage prospects in 2025, get in touch and a member of our mortgage team will contact you to discuss your requirements.