June 27, 2025
Article
The UK mortgage market is currently navigating an evolving landscape. While some lenders are offering rate reductions - particularly aimed at supporting first-time buyers - others are edging their rates upward in response to continued economic uncertainty. This reflects the backdrop of macroeconomic events shaping the financial outlook across the globe.
In May 2025, the Bank of England reduced the base rate from 4.5% to 4.25%. This move follows signs of softening inflation and slower-than-anticipated economic growth. The International Monetary Fund (IMF) recently downgraded the UK’s growth forecast, fuelling speculation that further base rate reductions could be on the horizon if inflationary pressures continue to ease.
In June 2025 the base rate was held at 4.25%, however, markets currently predict one or two further rate cuts this year. This suggests the base rate could reach as low as 3.75% by the end of the year, depending on how inflation behaves and whether consumer spending continues to weaken. While the Bank of England remains cautious and data-driven in its approach, a gradual easing of rates seems likely if current economic trends persist.
Lenders, in turn, are adapting their product offerings. While global trade tensions and supply chain challenges have added layers of complexity, many banks and building societies are competing for mortgage customers by reducing their fixedrate deals. Some lenders are now offering fixed rates below 3.90% for borrowers with a 40% deposit, which is a welcome opportunity for those with strong equity positions.
However, for borrowers with smaller deposits - such as those with 5% to put down - rates remain higher, averaging around 4.75%. This disparity continues to make affordability a key consideration, especially for younger or first-time buyers trying to get onto the property ladder.
Overall, the outlook for borrowers is cautiously optimistic. Should additional base rate cuts materialise in 2025, mortgage rates are likely to fall further, offering potential savings to new applicants and those approaching the end of their fixed-term deals.
We have continued to see strong lender appetite in certain segments. Many lenders are introducing innovative products, including green mortgages and incentive-led deals for energy-efficient homes. These products can offer more favourable terms - or cashback options – which will appeal to some clients.
In this evolving environment, bespoke mortgage advice is more important than ever. Whether you’re a first-time buyer, moving home, or considering a remortgage, understanding your affordability, and exploring the full range of available options, will help ensure your mortgage supports your wider financial goals.
At Albert Goodman, our mortgage team works closely with individuals and families to navigate the ever-changing mortgage market. We’re here to support you with all your mortgage requirements.
The mortgage rate figures quoted in this article are correct at the time of publication. This content is for information only and does not constitute advice. Your home may be repossessed if you do not keep up repayments on your mortgage.