Hello, and welcome to the Autumn edition of our Newsletter. As we move into the final parts of 2025, the UK mortgage market stands at an interesting juncture—one shaped by a confluence of macroeconomic pressures, shifting regulatory landscapes, and evolving borrower behaviour, and that’s before we comment on the regulator pushing lenders further up the risk curve and allowing borrowers in a climate of Consumer Duty to see their mortgage as a ‘do it yourself’ tool. I think it is fair to say the year so far has been marked by a cautious recovery, subtle resilience, and a persistent undercurrent of uncertainty. 2025 has by no means been a return to "business as usual." Instead, it has revealed a market adapting to a new normal: higher-for-longer interest rates, relatively uncertain housing activity, affordability issues for all types of borrowers. The most recent meeting of the Bank of England’s Monetary Policy Committee showcased the extent of the dilemma faced by the policymakers charged with setting UK interest rates. The nine members voted by a margin of five to four for a cut. That the decision is no longer intuitive is explained by the “hawkish” slant of recent economic data, with GDP growth low, inflation rising and remaining annoyingly above the BoE’s target. We are now in that period of the year when many lenders will be looking at their performance for the year thus far and their requirements for completions and applications, (the latter being their pipeline barometer) which will determine in some way their pricing until the end of the year. 27Tech reported, “there are now 26,933 products available to advisers and their clients, the highest number on record. August also marked the first time that more than 900 products were added in a single month, highlighting the fierce competition among lenders to attract borrowers”. Fixed-rate mortgage pricing has as we know gradually been edging downward this year as lenders adjust margins in response to falling swap rates and expectations that the BoE may begin cutting rates in early 2026 along with the overall economic uncertainty. Over the last 10/15 years fixed-rate mortgages as we know have become the only real deal in town, apart from when ERC free Trackers came to the fore at the beginning of the pandemic and then left as quickly when lenders realised what could happen to this book of business! Naturally, a fixed rate mortgage slows down how quickly changes in Bank Rate affect household mortgage payments. Currently: • 30% of mortgages are on 2-year fixed deals • 55% are on 5-year fixed deals • 5% are on deals between those durations • The remainder are on variable rates. This means the average mortgage rate paid changes only every 3.5 years. Although a Bank Rate was cut over a year ago, its full impact hasn’t yet reached many borrowers. For example, someone who took a 5-year Richard Howes Director of Mortgages Paradigm Mortgage Market Update 04 MORTGAGE NEWSLETTER
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