Tantrums and Tariffs – Will the UK Mortgage Market be Affected?

As we roll through 2025, the mortgage market continues to throw up its fair share of twists and turns as it reacts to a whole host of external economic and political events. Inflation, interest rates, global trade battles, tantrums, tariffs, wage growth, and a struggling economy all play a part in a conflicting maelstrom of forces.

Beyond the headlines of Ukraine and geopolitics, the growing tit-for-tat tariff war is setting the stage for economic shifts that could ripple through the UK. How much we’ll feel the pinch remains to be seen, but one thing is clear—global inflation could stay stubbornly high, making the Bank of England’s job that much harder. With members of the Monetary Policy Committee also looking closely at wage growth data, it is not a foregone conclusion that rates will fall as quickly as many of us hoped.

However, February did bring a little more positivity for borrowers, and as spring approaches, all eyes will be on the Bank of England, the Chancellor, and lenders themselves to see if we can finally turn cautious optimism into full-blown momentum.

Lenders and mortgage rates

Many lenders I’ve spoken to are quietly confident about 2025, predicting:

✅ More first-time buyer activity
✅ A surge in remortgages as borrowers hunt for better deals
✅ Professional landlords stepping in as amateur landlords exit

The consensus still suggests we could see up to three more rate cuts in 2025. If we end the year with a Bank of England base rate of 3.75%, as I confidently (ha!) predict, that would put us in a much better place for 2026, However, it does not mean that mortgage rates will drop like a stone, rather slow and steady, but we will all feel better if many of the best mortgage rates begin to start with a 3.

The recent products from a couple of lenders at 3.99% feel like an important start.

Encouragingly, we’re already seeing lenders pushing ahead with innovation, and some interesting new products are set to hit the market in the coming months. In fact, I would go so far as to say I am pretty excited by what could be coming down the track, joining the New Build Own New Scheme, Skipton’s 100% LTV Track record mortgage, Accords £5,000 deposit mortgage and April Mortgages’ Long-Term fixed proposition.

There are also more mortgage lenders who will lend 5.5 times income to certain borrowers, and a couple will even go to 6 times income, but it is so important to make sure you get proper advice as to whether one of these schemes is the right option for you. If you want to know more about any of these schemes, please do get in contact.

Easing regulations?

The new government has been talking for a while now about how to ease regulations and make buying their own homes easier. There is indeed plenty that policymakers could be doing to support the housing market. Lenders are still limited on how much lending they can do above 4.5 times income, it can’t be more than 15% of their total loan book, and there is much debate as to whether this will be lifted to a higher amount or will it be changed for smaller lenders serving the First-Time Buyer market who are disproportionally affected by this rule?

Will there finally be some fundamental changes to Stamp Duty, not just helping First-Timers fully but also encouraging those last-time downsizers or landlords to sell to tenants by excluding them from Capital Gains Tax on such sales and exempting the tenant from stamp duty?

Can we lift the Lifetime ISA cap and linked property values, change some of the stress-testing rules to improve affordability while still ensuring responsible lending, and ease some regulations so that lenders feel more comfortable innovating?

It’s no secret that a thriving housing market fuels economic growth. It’s not just about getting people into homes—it’s about social mobility, stimulating spending, and supporting the myriad small businesses that revolve around homebuying, from estate agents to furniture stores and tradespeople. If there was ever a time to get serious about ensuring a well-functioning property market, it’s now.

Watch this space!

Best Mortgage Rates

In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.11% (6.20% APRC) and 5-year fixes from 4.01%, (6.00% APRC), whilst variable discounted rates are around from 4.29%, (5.80% APRC) and variable tracker rates from 4.61% (7.60%).

Those looking at Buy-To-Let can now obtain products from 3.39% (8.00% APRC) for a 2-Year fixed, 4.77%, (7.50% APRC) for a 2-year tracker or 5-year fixes are available from 3.94% (7.00% APRC).

Contact

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Important

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