Mortgage Market Overview: October 2025

After 5 in the past 12 months, the Bank of England parked the base rate at 4% in September. The big question: will it move again before the end of 2025? At this stage, it’s looking unlikely. Inflation is proving stubborn, holding at 3.8% in both July and August. That’s still nearly double the 2% target, so the Bank isn’t in a rush to loosen policy further.

For borrowers, though, there’s been some good news. Mortgage rates have gradually been drifting down. The average five-year fixed dipped below 5% in August for the first time since spring 2023. It’s not the dramatic drop many hoped for, but every little helps when it comes to monthly payments.

On the property side, prices have gone pretty flat. Nationwide’s data shows a 0.1% fall in August, with annual growth down to 2.3%. That’s hardly a crash, but it does highlight how the market has cooled since the Stamp Duty changes back in April.

What’s interesting, though, is all the speculation about taxes. The Autumn Budget is already casting a shadow. Among the rumours:

• Replacing Stamp Duty with an annual land tax for properties over £500k
• A new Capital Gains Tax on main homes worth over £1.5m

If either of these come in, they’ll have an impact – especially at the upper end of the market. Until we know more, sellers are being told to price sensibly. Rightmove’s numbers back this up: homes priced realistically sell in just over a month, while those with reductions hang around for more than three months.

The UK Finance Household Finance Review points to resilient consumer finances. Savings are growing, and the government’s decision to keep cash ISA limits unchanged offers households more flexibility to allocate spare income into risk-free vehicles.

This backdrop partly explains the current refinancing activity, despite large volumes of fixed-rate mortgages maturing this year. Borrowers appear to be waiting for further rate cuts before locking into new deals, while fewer customers are sitting on expensive Standard Variable Rates. Advisers should anticipate a pick-up in remortgage demand once there is more certainty around the Bank of England’s path on rates.

Despite all the noise around regulation and tax, most landlords aren’t heading for the exits. Landbay’s 2025 survey shows that 58% of landlords have no plans to sell property this year, up from 47% a year ago. Only a small minority intend to offload significant portions of their portfolios.

The key pressures for those considering sales are the forthcoming Renters’ Rights Bill and ongoing taxation concerns. Interestingly, taxation has dropped down the list of worries compared to last year (31% citing it now, versus 51% in 2024). That said, rumours about National Insurance being charged on rental income will no doubt raise eyebrows. Clients will be looking for reassurance on how new rules could affect them.

Barclays’ research highlights a notable shift in first-time buyer behaviour. Semi-detached homes now make up a third (33.5%) of purchases, up 1.7% year-on-year, while flats have slipped in popularity to under 20%.

Affordability pressures are encouraging longer mortgage terms, with over 41% of first-time buyers now opting for 30-plus-year deals. Millennials, in particular, are prioritising space with 22% purchasing more bedrooms than needed to avoid upsizing in the near future. These trends underline the importance of advisers presenting flexible product options, balancing immediate affordability with long-term repayment considerations.

• Rates are stable, but don’t expect big cuts anytime soon. The base rate is likely stuck at 4% for the rest of 2025.
• House prices are flat, and the Autumn Budget will be the next big swing factor. Any changes to SDLT or CGT could shift the market.
• Borrowers are cautious but better placed. Savings are strong, remortgaging is simmering, and first-time buyers are adapting to the new normal.
• Landlords are holding firm. The sector’s resilience is stronger than last year, even with regulation looming.

It’s a calmer market than we’ve been used to, but it’s not without its challenges. The big thing to watch is the Autumn Budget – that could change the mood overnight. In the meantime, there’s a real opportunity to help clients cut through the noise, understand what’s happening with rates, and make confident decisions.

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