fixed mortgage before the December 2021 rate hike won’t see higher payments until late 2026. Interestingly, according to 27Tech in their latest market update, the type of products borrowers are searching for is changing too. “Ten-year fixed deals now account for just 12.41% of searches, the lowest ever share. That is down from 22.62% in August 2024 and from a peak of 36.71% in June 2022. Instead, shorter-term fixes are proving more popular, with many borrowers prioritising flexibility in a shifting rate environment”. The average mortgage rate paid is expected to peak in October at 4.00% according to Capital Economics, up from 3.88% in June. Even if the Bank Rate drops to 3.00% by 2026, the average rate paid would still be around 4.00% by the end of 2027, unless more borrowers switch to shorter-term or floating rate deals. Mortgage approvals have shown a modest improvement in 2025, with a slow but steady uptick in activity since the spring. According to Bank of England data, net mortgage approvals for house purchases have averaged around 55,000 per month, a slight increase from the 2024 average, though still well below pre-pandemic norms. Gross mortgage lending is expected to total approximately £240–£260 billion for 2025, although Lloyds have recently suggested this could go up to £285Billion excluding Product Transfers which add considerably to the overall market. This growth has been driven largely by a pick-up recently in remortgaging activity and a modest return of first-time buyers, spurred by improving lender competition and the gradual introduction of targeted affordability support. The housing market “retreated slightly” over July making previous signs of recovery uncertain, research from the Royal Institute of Chartered Surveyors has found. Rics’s UK Residential Survey for July 2025, found the tentative signs of recovery that emerged 05 MORTGAGE NEWSLETTER Continued on next page... in June’s survey were partially reversed, with measures of demand and agreed sales slipping back into slightly negative territory. But, Zoopla’s August’s House Price Index shows a 5% rise in sales and 4% increase in buyer demand. Although, regional differences persist, with northern areas seeing quicker sales due to better affordability, while southern regions face slower transactions. House price growth has slowed to 1.3% annually, with the average UK home now valued at £270,600. Increased supply and affordability pressures are key factors. Speculation around potential tax reforms, such as replacing stamp duty with an annual property tax for homes over £500k, has introduced uncertainty ahead of the Autumn Budget, potentially impacting buyer sentiment and market activity. Zoopla expects house price inflation to remain between 1.5–2% for the rest of 2025, with total sales forecast to rise 5% year-on-year. In monetary terms it appears the residential mortgage market is running at a level of £6.1bn per week with the number of Applications running at 25,585. The yearto-date cumulative Application value is now £207bn, a 22% increase on the same period in 2024. In the “battered” Buy to Let market the average weekly total appears to be flattening out at £844m. Whilst the purchase market appears under strain it is good to see the Remortgage market remain strong. The resilience in the market is reflected in a recent BTL barometer report from TML which states landlord confidence in the near term prospects for the PRS remains steady, with a slight increase in rental yield confidence. In terms of the BTL market dynamics TMW report in the barometer, the proportion of landlords putting rents up in the last 12 months is 5% lower than a year ago. It goes onto say 4 in 10 landlords will remortgage or take a product transfer in the next year, 22% of which will be in a limited company1. Source: 1. TMW Landlord Trends report Q2 2025
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