Ollie Sills, our Strategic Growth Partner, provides an update on the mortgage market, as we see mortgage rates falling, mortgage approvals rising and more innovation, which is continuing to improve accessibility and affordability.
The UK mortgage market is entering a dynamic and promising phase, with falling interest rates, progressive lending policies, and innovative products reshaping the landscape. For homeowners, first-time buyers, and investors, the outlook is increasingly optimistic and the time to act may be now.
Interest Rates: An ever-improving market for Borrowers
After years of elevated borrowing costs, the tide is turning. As of July 2025, average two and five-year fixed mortgage rates have dropped to around 5.08%, with some lenders offering deals below 4% for those with the largest deposits. Levels not seen since 2022¹. This is more than a dip; it’s a strategic shift driven by lender competition and a more stable economic outlook.
The Bank of England has been instrumental, cutting the base rate multiple times since August 2024. Now at 4%, further reductions are possible.
This comes at a critical time: over 3 million fixed-rate mortgage deals are set to expire across 2025 and 2026², with many facing higher monthly payments. The ability to borrow more, and at lower rates, could be the lifeline many need to refinance or move forward confidently.
Mortgage Approvals: Momentum Building
Confidence is returning to the market. Mortgage approvals climbed to 64,170 in June 2025, up from 63,030 in May. This steady rise signals renewed activity and optimism among buyers. Gross mortgage advances hit £77.6 billion in Q1 2025, a 12.8% quarterly increase and the highest since late 2022³. New mortgage commitments remain strong, showing that lenders are not just open for business, they’re actively backing borrowers.
Product Innovation: Fuelling Accessibility
In a move to stimulate the market, the Bank of England has relaxed its stance on high loan-to-income (LTI) mortgages. As a result, there are examples of lenders which are not only improving their affordability models, but also stepping up with creative solutions to meet modern challenges:
- Joint Borrower, Sole Proprietor Mortgages: Now offered by over 10 lenders, including NatWest and Barclays, allowing family income support without stamp duty implications.
- Delayed Start Mortgage: Skipton’s new product gives first-time buyers a 3-month payment holiday to ease into homeownership.
- £5,000 Deposit Mortgages: Yorkshire Building Society’s low-deposit option opens doors for buyers with limited savings.
- Enhanced Affordability Calculators: Nationwide and Perenna now offer up to 6× income multiples, while April Mortgages push the boundary to 7× income.
These innovations are reshaping affordability and making homeownership more attainable than ever.
What Should Borrowers Do Now?
With rates falling and lender appetite rising, here’s how to stay ahead:
- Review your mortgage: If your deal is ending, explore new options now.
- Consider how long your next product runs for: Two-year products offer flexibility and could benefit from further rate drops, while longer term fixes give certainty of payments for the foreseeable future
- Speak with the Chase de Vere mortgage team: Expert advice can help you navigate the evolving landscape and secure the best deal.
The mortgage service at Chase de Vere provides a fee-free advice solution and can help answer any questions you have as well as helping you throughout the application process.
The information contained within this article is for guidance only and does not constitute financial advice.
¹ https://moneyfactscompare.co.uk/news/mortgages/
² https://www.statista.com/statistics/1399938/monthly-cost-increase-of-uk-mortgages/
³ http://www.ukfinance.org.uk/
Content correct at time of writing.