The UK Mortgage Market in 2025: Key Trends and What They Mean for You

The UK mortgage market is going through a period of change, with shifts in lending, affordability, and government policy shaping the landscape. Whether you’re a first-time buyer, remortgaging, or looking to move, understanding these trends can help you make informed decisions.

1. First-Time Buyers Are Gaining Market Share

A key trend in the current mortgage market is the growing number of first-time buyers. As of the last quarter of 2024, first-time buyers accounted for a record 29.6% of all mortgage lending. This increase is partly driven by the fact that, in many cases, it is now cheaper to buy than to rent. The average monthly mortgage payment for first-time buyers in February 2025 was £1,038, compared to an average rent of £1,248 across Great Britain.

2. Mortgage Rates and Lending Criteria Are Shifting

The cost of borrowing has fluctuated over the past year, with lenders adjusting mortgage rates in response to inflation and Bank of England decisions. While mortgage rates remain higher than their historic lows, some stability has returned, making long-term fixed-rate deals more attractive to borrowers. The Financial Conduct Authority (FCA) is also considering relaxing some lending rules, which could make it easier for buyers to secure a mortgage. Proposed changes could relax affordability assessments, potentially opening up more opportunities for those who have struggled to get on the property ladder.

3. Government Housing Policy in 2025

Following last year’s general election, the new government has put housing affordability high on its agenda. Policymakers are expected to introduce measures aimed at boosting homeownership, improving affordability, and increasing housing supply. Some housebuilders have already responded by planning to construct more homes to meet growing demand.

What This Means for Borrowers

• If you’re a first-time buyer: The market is shifting in your favour, with mortgage costs often lower than rent and potential policy changes making it easier to secure a loan.

• If you’re remortgaging: Fixed-rate deals may offer stability, but it’s important to compare your options as rates continue to fluctuate.

• If you’re moving: Pay close attention to house price trends and lending criteria, as these could impact affordability.

Final Thoughts

The mortgage market is evolving and keeping up with these changes can help you make better financial decisions. Whether you’re planning your first home purchase or reviewing your current mortgage, working with a mortgage broker can help you navigate the market and find the best deal for your situation.

The UK mortgage market is experiencing notable shifts. In the last quarter of 2024, first-time buyers accounted for a record 29.6% of all mortgage lending, driven by the fact that purchasing a property has become more affordable than renting. The average monthly mortgage payment for first-time buyers was £1,038 in February 2025, compared to an average rent of £1,248 in the UK.  In addition, the Financial Conduct Authority plans to relax mortgage lending rules, potentially making it easier for individuals to purchase homes.  These developments indicate a dynamic and evolving mortgage landscape in the UK.