Going into Autumn we have continued to see a steady mortgage market, made up of a mixture of purchase and remortgage transactions. The UK housing market is showing notable resilience with house price growth for 2025 forecast to be modest, typically in the 1% to 4% range, with regional variations.
Although we have seen an unexpected upward trend in fixed rates in the past weeks, there has been a similar up and down pattern over the past 12 months, with the average fixed rates over the period having stayed stable. Specific rates vary significantly based on Loan-to-Value (LTV), with deals for 60% LTV starting lower (in the 3.8%–4.2% range) and higher LTV products (95%) being around 5%.
The Bank of England held the base rate at their last meeting in September. This followed a cut to 4.00% at their previous meeting in August. The recent mortgage rate rises are linked to a shift in market expectation for the Bank of England base rate. Financial traders now expect the Bank of England to delay its next rate cut until spring 2026, later than previously forecast, due to concerns over sticky core inflation. This expectation is driving up the cost of funding for lenders (swap rates), which is then passed on to borrowers.
Looking Ahead
The next Monetary Policy Committee (MPC) meeting is set for 6th November 2025 and most experts are now predicting the base rate to stay at 4% until early 2026, this follows recent negative news on inflation figures. Long term expectations for the base rate are between 3% and 4%. As the Base Rate falls, fixed-rate mortgage deals are expected to trend lower.
Shorter-term fixed rates (2-year) have become more competitive than longer-term deals in some instances, reflecting the expectation of future rate cuts. Many forecasts suggest that average fixed mortgage rates could stabilize in the 3.5% to 4.5% band over the next few years.
The Autumn Budget is expected to take place on 26th November. In the Autumn Budget, the Chancellor reveals tax, borrowing and spending plans for the year ahead while trying to ensure the state finances remain balanced. There’s speculation that the Chancellor may consider a broader overhaul of property taxation, including stamp duty and capital gains tax, although major changes seem unlikely. There are also reports of introducing a charge for national insurance on rental income which could further impact landlords’ margins.