Since our last update in March, we have continued to see a very busy mortgage market. The market eased slightly in April, likely due to the end of the stamp duty holiday, even so gross mortgage lending for Jan-Apr 2025 was 31% higher than the previous year. The number of house purchases has remained consistent throughout May, June and July. 2025 is also a big year for remortgages with around 1.8 million deals coming to an end, especially towards the end of the year.
Fixed mortgage rates have been relatively stable since the start of the year; however, we have seen steady reductions since the start of June with the majority of high street lenders bringing out sub 4% products for the 60-75% Loan to Value (LTV) products in the past few weeks. With lenders keen to increase mortgage lending, we expect to see further reductions in rates over the coming months, assuming no further external shocks to the UK economy.
The Bank of England reduced the base rate to 4% at their last meeting on 7th August. This followed a cut to 4.25% at their meeting in May. Inflation has continued to remain above the target rate of 2%; at 3.6% in June 2025. With inflation still high, this may delay further cuts in interest rates by the Bank of England.
Looking Ahead
The next Monetary Policy Committee (MPC) meeting is set for 18th September 2025. While analysts predict further cuts later in 2025, the Bank has emphasized that its monetary policy will be responsive to evolving economic conditions. Following the recent poor UK economic growth figures, many experts had correctly predicted a rate reduction in August, with a further reduction later in the year, leaving the base rate at 3.75% by the end of 2025.
Although the Bank of England base rate does not directly impact the pricing of fixed rates, any reduction is good for the market and should mean fixed rates remain low in the medium / long term.
The Renters Rights Bill is currently within the final stages of its passage through the House of Lords. The Bill is expected to become law by the end of July with a commencement date set for later in the year. The aims of The Renters Rights Bill are to significantly reform the private rented sector by enhancing tenant rights and introducing new obligations for landlords. Key changes include abolishing “no-fault” evictions under Section 21, ending fixed-term tenancies, and establishing a landlord ombudsman. The Bill also seeks to improve property standards, ban rental bidding, and prohibit discrimination against tenants based on factors like benefits or children. We expect the Bill to have a major impact on the buy to let market in the coming years, this in turn will affect the costs of rental properties and the level of housing stock for residential properties.