Mortgage Market News 2025

Mortgage News – 27th May 2025

Nationwide and Santander raised rates last week, reflecting continued shifts in the lending market. Housing data painted a varied picture, with record levels of supply slowing asking price growth, while rents and house prices continued to climb. Affordability remained in focus as Barclays boosted borrowing capacity, stamp duty receipts held firm despite a threshold cut, and inflation rose to 3.5%, led by higher housing and service costs.

Mortgage Rate & Criteria Changes

Nationwide increased selected fixed mortgage rates by up to 0.15% for both new and existing customers.
Santander increased most fixed mortgage rates by 0.10% across new business and product transfer ranges, with minor rate reductions on selected new build products.
Gen H increased LTV limits on new build mortgages to improve access for buyers with limited deposits.
Yorkshire Building Society reduced mortgage rates by up to 0.44% across selected 2-, 3-, and 5-year fixed products.
Suffolk Building Society reduced rates by up to 0.24% on selected 2-year fixed residential and expat mortgage products.
Landbay reduced buy-to-let mortgage rates by up to 0.80% across its product range.
Buckinghamshire Building Society increased the Credit Restore maximum LTV to 75% and introduced a new 3-year fixed rate at 6.89%.
Aldermore reduced fixed mortgage rates by up to 0.35% across its residential and buy-to-let ranges for both new and existing borrowers.
Foundation Home Loans launched short-term let products and removed the £100,000 minimum loan size across its Plus range.
Molo reduced fixed mortgage rates by up to 0.30% for non-resident landlords.
Principality Intermediaries increased selected residential fixed mortgage rates by up to 0.12%.
The West Brom reduced 3-year fixed mortgage rates by up to 0.23% for buyers with smaller deposits.

Record Home Supply Curbs May House Price Growth Despite New High

Rightmove HPI May 2025 reported that average asking prices reached a new peak of £379,517 in May 2025, increasing by 0.6% monthly and 1.2% year-on-year. However, this was the smallest May increase since 2016, as a record number of properties on the market limited price momentum. Buyer activity dipped following April’s Stamp Duty rise, but sales agreed still rose 5% compared to last year, suggesting demand remained where pricing was competitive.

Barclays Increases Mortgage Borrowing Capacity with Affordability Rate Cuts

Barclays adjusted its mortgage affordability criteria, allowing some applicants to borrow up to £30,750 more, depending on their individual circumstances. The changes apply to both residential purchases and remortgages and are intended to enhance access to homeownership amid economic challenges. This move follows other supportive initiatives from the bank, such as its ‘Mortgage Boost’ product and increased loan limits for high loan-to-value purchases.

UK Inflation Rises Sharply in April Driven by Housing and Services Costs

Inflation accelerated in April, with CPI rising to 3.5% from 2.6% in March, largely due to increased costs in housing, transport, and services. The broader CPIH measure climbed to 4.1%, up from 3.4%, with core and services inflation also showing notable increases. This unexpected rise may influence the Bank of England’s upcoming rate decisions, potentially delaying anticipated cuts.

Rents Rise by 7.4% Annually as UK House Prices Continue Upward Trend – ONS

UK private rents increased by 7.4% in the year to April 2025, reaching an average of £1,335 per month, with notable regional variations across the UK. Meanwhile, average house prices rose by 6.4% to £271,000, showing continued strength in the housing market despite recent economic challenges. Rental inflation remains high due to sustained demand and limited supply, while house price growth was fuelled in part by activity ahead of Stamp Duty changes.

Stamp Duty Receipts Remain High at £1.3bn in April Despite Threshold Cut

Homebuyers in England paid £1.3bn in stamp duty in April, the first month following the reduction of the nil-rate threshold from £250,000 to £125,000. Although down from £1.4bn in March, it remains the second highest monthly total this year, with buyers paying an average of £4,782 in tax per purchase. The unchanged tax bands since 2014 have resulted in more buyers facing higher charges due to rising property values.

Swap Rates Rise Over the Week, but Remain Below 2024 Levels

Swap rates edged higher again last week, with the 2-year rate increasing by 0.021% to 3.810% and the 5-year rate rising by 0.049% to 3.853%. Compared to a month ago, both terms saw notable gains, with the 2-year up 0.126% and the 5-year up 0.151%. However, rates remain significantly below their levels from the same time last year, down 0.860% and 0.235% respectively.

Swap Rate	22-May-25	23-Apr-25	23-May-24
2 Year	3.810%	3.684%	4.670%
5 Year	3.853%	3.702%	4.088%

Updated 23rd May 2025

Mortgage News – 19th May 2025

Lenders continued to adjust their mortgage products to better support a range of borrowers in today’s changing market. Nationwide made it easier for people to borrow more by lowering its affordability checks, while LiveMore and April Mortgages launched new products aimed at older borrowers and first-time buyers without a deposit. The focus has shifted towards creating flexible and accessible options rather than just cutting rates.

Mortgage Rate & Criteria Changes

TSB increased selected residential and buy-to-let fixed rates by up to 0.20%.
Virgin Money reduced selected purchase and remortgage fixed rates by up to 0.25%.
HSBC reduced fixed residential mortgage rates across multiple LTV bands and product types.
Barclays reduced mortgage rates across its residential and remortgage ranges by up to 0.19%
Clydesdale Bank reduced selected mortgage rates across residential, exclusive, and professional products by up to 0.25%.
West Brom Building Society reduced 2-year fixed mortgage rates by up to 0.25%.
MPowered Mortgages reduced 3-year fixed rates to 3.88% for new purchase customers.
Kensington Mortgages reduced residential and buy-to-let mortgage rates by up to 1.55%.
Accord Mortgages reduced residential fixed rates by up to 0.24%.
Vida Homeloans reduced residential mortgage rates by up to 0.45% and buy-to-let rates by up to 0.50%.
Foundation Home Loans reduced buy-to-let mortgage rates by up to 0.55% across specialist property types.

April Mortgages Launches No Deposit Product to Support First-Time Buyers

April Mortgages introduced a 100% loan-to-value mortgage aimed at creditworthy first-time buyers unable to raise a deposit or rely on family help. The product, available on 10- and 15-year fixed terms, was designed in response to affordability issues caused by high property prices, rising rents, and stagnating purchasing power. Interest rates start from 5.99%, with automatic reductions as the loan-to-value ratio decreases, and the product offers flexible repayment features including no early repayment charges and unlimited overpayments.

Nationwide Cuts Stress Rates to Improve Borrowing Capacity

Nationwide has lowered its mortgage affordability stress rates by between 0.75% and 1.25%, enabling applicants to borrow more across all categories, including first-time buyers, home movers, and remortgagers. This follows updated FCA guidance allowing lenders to assess affordability using product rates, rather than higher revert rates. The change is expected to increase average borrowing potential by around £28,000, with the most significant gains for remortgagers not seeking further borrowing.

LiveMore Launches Flexible Part & Part Mortgage for Over-50s

LiveMore has launched a new Standard Part & Part mortgage tailored for borrowers aged 50 and over, offering a flexible blend of interest-only and capital repayment structures. The product allows customers to personalise their repayment split based on income and future plans, with terms of up to 40 years and no upper age limit. Designed for both working and retired individuals, the mortgage supports borrowing up to 80% loan-to-value and enables uses such as purchases, remortgages, or equity release.

Record Home Listings in May Held Back House Price Growth Despite New Asking Price High

Rightmove’s House Price Index revealed that average asking prices in May 2025 reached a record £379,517, increasing by 0.6% on the month and 1.2% annually. However, the price rise was the smallest for May since 2016, due to an unusually high volume of homes for sale, which diluted upward price pressure. While new seller activity surged with 14% more listings than last year, new buyer demand in April dropped 4% year-on-year following a Stamp Duty hike.

Mortgage Arrears Declined in Q1 Amid Continued Lender Support

Mortgage arrears fell in the first quarter of 2025, with homeowner arrears down by 2% and buy-to-let arrears dropping by 6% compared to the previous quarter, according to UK Finance. Despite the economic backdrop, the share of loans in arrears remained historically low, at 1.03% for homeowners and 0.61% for landlords. Although repossessions increased slightly, they stayed well below historic levels, with most cases involving mortgages over ten years old.

Construction Output Stagnant in Q1 Despite Surge in New Orders

Construction output in Great Britain remained flat in the first quarter of 2025, as growth in new work was offset by a decline in repair and maintenance activity. While March saw a modest monthly rise of 0.5%, bolstered by gains in private housing and infrastructure, the quarter overall showed no growth. Notably, new construction orders soared by 26.6%, driven largely by infrastructure and private industrial projects.

UK Economy Grows 0.7% in Q1, Driven by Services and Export Surge

The UK economy expanded by 0.7% in the first quarter of 2025, marking the strongest quarterly growth since Q2 2024, according to the Office for National Statistics GDP first quarterly estimate, UK: January to March 2025. The services sector led with a 0.7% rise, supported by a 1.1% increase in production, while construction output remained flat. Although the headline growth exceeded expectations, some analysts caution that part of the boost—particularly in exports—may be temporary, driven by a pre-tariff rush.

Buy-to-Let Yields Reach Highest Level Since 2011, Says Paragon Bank

Paragon Bank reported that average buy-to-let yields rose to 7.11% in April 2025, the highest level in over 14 years, surpassing the previous recent high of 6.94% at the end of 2024. The increase has been driven by high tenant demand and a shortage of rental properties, alongside subdued house price growth which has improved the yield-to-value ratio. Regional yields were strongest in Wales, Yorkshire & Humberside, and the North, while HMOs continued to deliver the highest returns by property type.

Buy-to-Let Mortgage Searches Drop to Lowest Level Since 2020

Buy-to-let mortgage searches fell to just 14.74% of the market in April 2025, the lowest share recorded since January 2020, according to data from Twenty7tec. This marks a sharp decline from recent highs, particularly within the £150k–£250k loan bracket, where searches dropped by over 24%. Meanwhile, there was a surge in demand for shorter-term fixed products, self-employed borrower interest reached record levels, and first-time buyer activity remained strong.

Swap Rates Edge Higher Amid Uncertainty Over Interest Rate Path

Swap rates saw an upward movement in the week ending 13th May 2025, with the 2-year rate rising to 3.789%, up 0.108% from the previous week, and the 5-year rate increasing to 3.804%, up 0.135% over the same period. While both rates remain below their levels a year ago, the recent uptick may reflect growing uncertainty following the Bank of England’s latest meeting minutes and a less definitive outlook on future rate cuts. Compared to last month, the 2-year and 5-year swaps are up by 0.049% and 0.062% respectively.

Swap Rate	15-May-25	16-Apr-25	16-May-24
2 Year	3.789%	3.740%	4.422%
5 Year	3.804%	3.742%	3.881%

Updated 16^th May 2025

Mortgage News – 12th May 2025

Lenders last week made further rate reductions, with product pricing continuing to reflect falling swap rates and the recent base rate cut. Meanwhile, household income data showed a decline for the poorest fifth, as overall income growth remained stagnant. Property prices saw modest growth in April, energy efficiency remained a concern for the majority of UK homes, and international trade developments offered only limited economic impact.

Mortgage Rate & Criteria Changes

Nationwide reduced rates by up to 0.30% across selected 2-, 3-, 5- and 10-year fixed and 2-year tracker mortgage products, including sub-4% options for first-time buyers and reductions for remortgage and switcher customers.
Nationwide reduced rates further for remortgage and switcher rates by up to 0.22%, and cut all 2-year tracker products by 0.25%, marking its fourth rate reduction in three weeks.
Halifax reduced rates by up to 0.18%
Santander reduced rates across its residential and buy-to-let mortgage range by up to 0.18%.
Virgin Money reduced fixed rates by up to 0.32% across selected residential, buy-to-let, shared ownership, and product transfer mortgages.
TSB lowered selected mortgage rates by up to 0.20%.
Coventry Building Society reduced fixed rates across residential purchase, remortgage, retention, and Buy to Let products, including Limited Company BTL options.
Leeds Building Society reduced residential fixed mortgage rates by up to 0.20%, including options for remortgages, homemovers, first-time buyers, and brokers.
Gen H reduced rates by up to 0.20% across high-LTV products and its New Build Boost offering, including 90%, 95%, and 85% LTV options on 2-, 3-, and 5-year fixed deals.
MPowered Mortgages reduced fixed mortgage rates by up to 0.17%, with new 2-, 3-, and 5-year deals starting from 3.89% for remortgages and 3.94% for purchases at 60% LTV.
Skipton Building Society launched a Delayed Start mortgage for first-time buyers, deferring repayments for three months with rates up to 95% LTV.
Pepper Money re-entered the buy-to-let market with new products for individuals and limited companies, offering rates from 4.99% and lending up to 80% LTV with no minimum income required.
Paragon Bank expanded its 80% LTV buy-to-let range to include product switches and further advances, with rates from 6.24% and no application fees.
The Mortgage Works reduced selected buy-to-let and limited company mortgage rates by up to 0.30%.

Household Income Declines for Poorest Fifth as Overall Growth Stalls

Household disposable income for the poorest fifth of UK residents fell by 2.6% to £16,800 in the financial year ending 2024, driven primarily by a decline in wages and salaries. The richest fifth also experienced a 1.6% fall in income to £71,100, with original income cited as the main contributor. While overall UK household disposable income rose marginally by 0.8% to £36,700, this change was not statistically significant and remained close to pre-pandemic levels. Average household income, UK: Financial Year Ending 2024

Halifax Reports Modest House Price Growth in April

Halifax reported a 0.3% increase in house prices for April, reversing the 0.5% decline seen in March. Annual price growth rose to 3.2%, with Northern Ireland, Wales and Scotland leading the gains, although quarterly prices dipped slightly by 0.1%. Over the last six months, prices have stayed remarkably stable, down by just £48 overall, with market resilience noted amid ongoing mortgage rate cuts. Halifax House Price Index April 2025

Over Half of UK Homes Have Poor Energy Efficiency Ratings

New research by rental provider UNCLE revealed that more than 15 million UK homes are rated EPC D or below, with only 0.4% achieving an A rating. The study found Milton Keynes had the best energy performance, while Blackpool had the worst, with 74.1% of homes in the lowest categories. Experts highlighted boiler upgrades, smart heating controls, and pipe insulation as cost-effective ways to improve energy efficiency.

US-UK Trade Deal Offers Limited Relief for UK Economy

The newly announced US-UK trade deal brings some modest relief, including reduced tariffs on cars, steel, and aluminium, but falls short of being a transformative agreement. While it symbolises renewed cooperation and follows other deals with India and potentially the EU, most UK exporters continue to face significant barriers. Economists argue the deal is more political than practical, offering only marginal economic benefits and limited immediate impact on UK trade dynamics.

Bank of England Cuts Base Rate to 4.25%, Boosting Borrower Confidence

The Bank of England cut the base rate to 4.25%, with two members of the Monetary Policy Committee advocating for a larger 0.50% reduction, hinting at the potential for further easing. The move, though widely expected, provided a psychological lift for borrowers and follows a recent wave of mortgage rate cuts. Experts believe this could encourage more activity in the housing market, especially with swap rates and product pricing likely to continue trending downward. Bank Rate reduced to 4.25% – May 2025

Borrowers Weigh Timing of Fixed Deals as Rates Fall

Following the Bank of England’s 0.25% base rate cut to 4.25%, brokers are urging caution as borrowers grapple with whether to lock into a fixed mortgage deal now or wait for further reductions. With rates declining quickly and competition intensifying among lenders, many experts suggest shorter-term fixes or trackers may offer flexibility without locking in prematurely. However, others argue longer-term fixes will grow in appeal once rates stabilise, especially for those prioritising certainty over potential future savings.

Experts Predict Possibility of Sub-3.5% Mortgage Rates by Year-End

Industry experts believe mortgage rates could fall to or below 3.5% before the end of 2025, driven by expected Bank of England base rate cuts and increasing lender competition. While sub-3.5% deals may appear, particularly for low loan-to-value borrowers, they are expected to be limited and often accompanied by high fees. Most borrowers are likely to see rates in the 3.75%–4.25% range unless base rate reductions exceed current forecasts.

Swap rates rose over the past week, reversing part of the prior month’s declines

Swap rates increased last week, with the 2-year swap rate rising to 3.681%, up 0.106% from 3.575% the previous week. Despite the weekly rise, the 2-year rate remains 0.072% lower than one month ago and has fallen 0.763% compared to the same time last year. The 5-year swap rate also climbed to 3.669%, marking a 0.068% weekly increase, though it is still down 0.168% from a month ago and 0.251% lower year-on-year.

Swap Rate	08-May-25	09-Apr-25	09-May-24
2 Year	3.681%	3.753%	4.444%
5 Year	3.669%	3.837%	3.920%

Updated 9^th May 2025

Mortgage News – 6th May 2025

The property market saw significant developments this week, driven by shifting demand, tax changes, and growing calls for interest rate cuts. HMRC data confirmed a sharp rise in property transactions during March as buyers rushed to complete purchases before the Stamp Duty threshold changes, while the Bank of England reported a surge in mortgage borrowing. Meanwhile, both house price growth and rental demand showed signs of moderation, with experts urging the Bank of England to act decisively at its upcoming rate meeting to support economic stability.

Mortgage Rate & Criteria Changes

MPowered Mortgages reduced its 3-year fixed remortgage rates to start from 3.98%.
Virgin Money updated its product transfer process to automatically complete most offers without requiring a signed acceptance form.
Gen H reduced its 5-year fixed mortgage rates by up to 0.21%.
Clydesdale Bank adjusted its mortgage rates, with reductions of up to 0.15% on selected residential products and increases of up to 0.09% on certain buy-to-let deals.
Barclays reduced multiple residential mortgage rates by up to 0.33%, expanding its sub-4% product range across purchase, remortgage, and green mortgage options.
Halifax reduced rates across selected residential remortgage products by up to 0.34%.
Virgin Money introduced new mortgage exclusives and reduced selected fixed rates by up to 0.17% across residential and buy-to-let ranges.
Santander launched over 50 new mortgage products, including new build and 3-year fixed deals, with rates from 3.89% and cashback incentives up to £250.
Coventry for Intermediaries reduced selected fixed rates across residential, buy-to-let, and limited company buy-to-let products, with rates now starting from 3.96%.
Accord Mortgages adjusted its affordability model, enabling borrowers to access on average 15% or £37,000 more in lending.
Principality Building Society reduced mortgage rates across residential, buy-to-let, and specialist products by up to 0.32%.
Paragon Bank launched limited-edition buy-to-let mortgages, with 5-year fixed rates starting from 4.29%.
The Mortgage Works reduced selected 2- and 5-year buy-to-let mortgage rates by up to 0.20%, with rates now starting from 2.99%.
Fleet Mortgages cut 5-year fixed rates on HMO and MUFB products by 0.15% and introduced up to £2,000 cashback for landlords.

House Price Market Update

UK house price growth showed signs of slowing in early 2025, with both Zoopla (Zoopla House Price Index: April 2025) and Nationwide (Nationwide: Annual house price growth slows slightly in April) reporting a cooling in momentum. Zoopla recorded annual growth at 1.6% in March, down from 1.9% in December, while Nationwide noted a further dip to 3.4% in April, from 3.9% the previous month. The market experienced increased supply and softening demand following the end of Stamp Duty relief, with economic uncertainty and seasonal factors also contributing to subdued activity.

Rents hit new record despite rise in supply, says Rightmove

Rightmove’s report (average rents rise rental trends trackerapr25) showed that average advertised rents outside London reached a record £1,349 per month, up 0.6% this quarter, while London rents rose to £2,698, marking the 14th consecutive record. Despite an 11% increase in new rental listings and an 18% rise in available stock year-on-year, tenant demand remained strong, although slightly down compared to last year. Enquiries per property have dropped but remain well above pre-pandemic levels, with affordability pressures prompting more price reductions.

Property market surged in March ahead of Stamp Duty changes, says HMRC

HMRC data revealed a sharp rise in UK property transactions in March 2025, as buyers rushed to complete purchases before changes to Stamp Duty Land Tax came into effect on 1st April. Seasonally adjusted residential transactions climbed 62% month-on-month to 177,370, with non-residential deals also seeing notable growth. The surge mirrored previous spikes ahead of tax changes, highlighting how fiscal deadlines continue to strongly influence market behaviour. UK monthly property transactions commentary April 2025

Mortgage borrowing surged in March while consumer credit growth slowed, says BoE

The Bank of England reported a sharp rise in net mortgage borrowing in March 2025, jumping to £13.0bn from £3.3bn in February, driven by buyers completing transactions ahead of Stamp Duty changes. Despite this surge, mortgage approvals for purchases fell for the third month in a row, while remortgaging approvals increased slightly. Consumer credit growth slowed significantly, particularly in credit card borrowing, while household savings and overall money supply both saw notable increases. BOE: Money and Credit – March 2025

BoE urged to cut rates as pressure mounts from weak economy and global uncertainty

Financial experts and business leaders have called on the Bank of England to cut the base rate at its upcoming May decision, citing sluggish economic growth, fading consumer confidence, and global trade instability. The consensus among commentators suggests a 0.25% cut is most likely, though some advocated for a bolder 0.5% move to stimulate the economy and support households. Despite inflation sitting at 2.6%, concerns about rising living costs, tariff threats, and stagnant investment have amplified calls for immediate action.

Swap rates declined again as markets priced in rate cut expectations

Swap rates continued to fall in early May, with the 2-year rate dropping to 3.575%, down 0.056% from last week and 0.387% from a month ago. The 5-year swap rate also declined to 3.601%, 0.040% lower than last week and 0.317% down month-on-month. Compared to a year ago, the 2-year rate has fallen by 1.041%, while the 5-year is down by 0.511%, reflecting growing expectations of monetary easing.