UK Mortgage Market Update

UK Mortgage Market Update – 12th September 2025

The Bank of England’s base rate remains at 4.00%, but fixed mortgage rates have risen as lenders respond to higher swap rates and public finance concerns. Buy-to-let borrowing costs, however, have eased, while house prices show signs of cooling.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

What Moved UK Mortgage Pricing Today

• BoE base rate unchanged at 4.00% (last move August 2025).

• Lenders including Barclays and Nationwide lifted some fixed mortgage rates by up to 0.20%.

• Buy-to-let mortgage rates fell: average two-year fixed at ~4.88%, five-year fixed at ~5.21%, lowest since 2022.

• Nationwide data shows average UK house prices dipped 0.1% in August; annual growth slowed.

Bank of England and Swap Rates

Inflation remains high at around 3.8%, limiting further base rate cuts for now. Long-term borrowing costs (swap rates and gilt yields) are driving lender pricing, which explains why mortgage rates can rise even when the base rate stands still.

Gross mortgage advances fell 24.2% to £58.8bn in Q2 2025, while new commitments climbed to £78.2bn, the highest since 2022. High loan-to-value (LTV) lending has risen to 7.1%, the most since 2008.

What This Could Mean for Borrowers

First-time buyers and movers face stretched affordability. Bigger deposits or lower LTV products remain more accessible.
Remortgagers coming off historic low fixed deals may see sharp increases in monthly payments.
Buy-to-let landlords benefit from falling rates, though tax and regulatory pressures remain.
Tracker and variable borrowers remain directly exposed to base rate changes.

International and Domestic Factors To Watch

• Next BoE MPC meeting: 18 September 2025.

• Swap rates and gilt yields – any increase here will filter into fixed mortgage pricing.

• Inflation and wage growth data for early autumn.

• Government fiscal position and possible housing policy changes.

Key Numbers At A Glance

• Bank of England Base Rate: 4.00%

• Two-year fixed BTL average: ≈ 4.88%

• Five-year fixed BTL average: ≈ 5.21%

• House prices: -0.1% month-on-month in August, annual growth ≈ 2.1%

Information Only, Not Advice

This article is for information only and is not financial advice. Mortgage product availability depends on your individual circumstances, including deposit, credit history, income and affordability. Rates and terms can change quickly. Always review full costs and conditions, and consider speaking to a regulated mortgage adviser.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

If you’d like to understand what today’s market moves could mean for you, speak to Mortgage One Finance. We can explain your options and timings based on your circumstances. Visit Mortgage One Finance.

FAQs

Q: Why are fixed mortgage rates rising if the Bank of England base rate is unchanged?
A: Lenders price fixed mortgages using swap rates and gilt yields, which reflect expectations of future borrowing costs. These have risen recently.

Q: Are buy-to-let mortgage rates improving?
A: Yes. Increased competition among lenders has pushed average BTL fixed rates lower, though landlords still face tax and regulatory challenges.

Q: What should I do if my fixed mortgage deal is ending?
A: Explore remortgage options early to avoid rolling onto your lender’s standard variable rate (SVR), which is often more expensive.

Q: Will mortgage rates fall later in 2025?
A: It depends on inflation, economic data and government finances. Market expectations currently limit how far rates can drop in the near term.

Sources

• UK buy-to-let borrowing costs fall to three-year low, Financial Times, 11 September 2025

• Lenders lift mortgage rates as worries mount over public finances, Financial Times, 6 September 2025

• ‘Shock’ in store for 350,000 UK households on low-interest fixed-rate mortgages, The Guardian, 9 September 2025

• UK house prices in surprise fall amid high mortgage costs, The Guardian (Nationwide), 1 September 2025

• Bank Rate and interest rates explained, Bank of England, 21 August 2025

• Mortgage lending statistics Q2 2025, Bank of England / FCA, 5 September 2025