Alex Sharp of GAM Home Loan Specialists writes about the changing mortgage landscape in the UK.

We have seen a lot of changes to the mortgage market over the last three years.

Whether you're a first-time buyer, a seasoned investor, or looking to re-mortgage, understanding the current trends is essential to making informed decisions.

Mortgage Rates and the Bank of England

In 2025, interest rates remain a pivotal factor for borrowers.

Following significant fluctuations in recent years, the Bank of England has aimed to stabilise rates to curb inflation while supporting economic growth.

Predictions are always difficult, but experts are currently predicting 2025 to end with a Bank of England Base Rate of 4.25 per cent.

This is 0.50 per cent lower than currently. Mortgage rates will fluctuate across the year which is why we recommend speaking to your Mortgage Adviser early.

If you have a fixed rate ending in 2025 speak to your adviser six months prior to seek advice.

You can secure a rate early and then make changes over the following months.

Affordability Rules

Affordability continues to be a concern for many prospective buyers.

The government is reportedly considering relaxing mortgage affordability rules, a move that could make it easier for more people to secure loans.

This potential change aims to address barriers for first-time buyers, though it may also raise concerns about overextending borrowers in the long term.

Currently, lenders can allocate no more than 15 per cent of their total mortgage loan book to borrowers seeking loans exceeding 4.5 times their annual salary. Changes to this rule would open up the market to thousands more potential borrowers.

GAM Home Loan Specialists is run by Gary (left) and Alex Sharp (image supplied)

Green Mortgages and Sustainability

The growing focus on environmental sustainability has extended to the mortgage market.

Green mortgages, which offer preferential rates or incentives for energy-efficient properties, have gained traction.

Homeowners are also increasingly considering retrofitting older properties to improve energy performance, leveraging schemes that provide financial support for such upgrades.

For lenders, assessing the energy efficiency of properties has become a critical part of the underwriting process. Borrowers are advised to consider energy performance ratings (EPCs) not only for environmental benefits but also to enhance the future resale value of their homes.

For example, Virgin Money are offering up to £7,000 cashback to customers who improve the energy efficiency of their homes. Other lenders including Halifax have similar schemes.

'The mortgage market in 2025 presents both challenges and opportunities' (image via SWNS)

Final Thoughts

The mortgage market in 2025 presents both challenges and opportunities.

Staying informed about trends, seeking expert advice, and leveraging available resources are crucial steps for anyone navigating this dynamic landscape.

Whether you're buying your first home, expanding your property portfolio, or simply aiming to reduce monthly payments, understanding the market's direction will help you achieve your financial goals.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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