Mortgage Market Update

June 2025 Mortgage Market Update - What do the inflation rises mean for interest rates?

🏡 June 2025 Mortgage Market Update – 📈 Market Momentum Builds as Summer Begins

Following the Bank of England’s base rate reduction to 4.25% in May, the mortgage market initially showed encouraging signs of recovery. Early in the month, swap rates remained relatively stable, prompting lenders such as Barclays, Halifax, and HSBC to reduce fixed mortgage rates by 0.10–0.15%, while Nationwide cut rates by as much as 0.22%. ✅

However, this trend shifted mid-May after the release of higher-than-expected inflation figures 📊, with UK inflation rising to 3.5%—the highest level since January 2024. This unexpected rise led to increased market uncertainty 😬, pushing swap rates up. The 2-year swap rate climbed to 3.789%, and the 5-year swap rate reached 3.804% (Source: Kerr & Watson).

As a result, many lenders—including HSBC, NatWest, Halifax, and Santander—have since reversed their earlier rate cuts and are now increasing fixed mortgage rates in response to the upward movement in swap rates. 📉➡️📈

🏘️ Housing Market Resilience Amid Policy Changes

Despite a dip in mortgage approvals in April due to the end of the stamp duty holiday 🧾, house prices rebounded in May, rising by 0.5% and bringing annual growth to 3.5%. This suggests the April decline was a temporary blip ⏳, with the market buoyed by falling mortgage rates and rising wages 💷 (Source: thetimes.co.uk).

💡 What This Means for Borrowers

If you're considering a mortgage:

⚠️ Act Promptly (Don’t Wait on Uncertainty):
Many clients are currently holding off on securing a rate, hoping that mortgage rates will fall. The good news is that once we secure a rate, we continue to monitor the market on your behalf 🔍—and if your chosen lender reduces their rates before completion, we’ll get in touch to see if switching could benefit you.
We’ve a great example in May of a client’s rate reducing and saving £6,550.80 over 5 years 💰—and they still completed in time for 2nd June! In today’s climate, delaying may prove more costly than acting decisively. 🚀
🧑‍💼 Work with a Mortgage Advisor:
Navigating today’s shifting mortgage market can be time-consuming and overwhelming—especially if you’re juggling a busy work/life schedule 🏃‍♂️📅.
We aim to take the headache out of the process, handling the research, rate tracking, and paperwork so you don’t have to. 📝 Our goal is to identify the best opportunities for you with minimal disruption to your day.