How to navigate the mortgage market in 2025

The mortgage market can sometimes feel like a puzzle, with ever-changing pieces and a constant stream of news about interest rates. If you’re looking to buy your first home, move to your next, or remortgage in 2025, you might be wondering how to make the smartest move.

With a little clarity and planning, you can easily take control of your home-buying or remortgaging journey this year. Let’s demystify how mortgage rates really work and what you can do to take advantage of current market conditions, no matter where you are on your homeownership journey.

What drives mortgage rates?

It’s a common assumption that mortgage rates always move in lockstep with the Bank of England’s base rate decisions. While the base rate certainly influences pricing, it’s not the whole story, especially for fixed-rate mortgages.

Banks and lenders actually price their fixed-rate mortgages on long-term forecasts. They rely heavily on something called swap rates – financial indicators that reflect what markets think interest rates (and the wider economy) will do over the entire term of the mortgage. These can shift based on economic outlooks, inflation data, and market sentiment. This means that even if the Bank of England hasn’t cut rates yet, the market might have already “priced in” expected future cuts, meaning you can potentially access competitive fixed-rate deals ahead of time.

The power of locking in your rate

Many people don’t realise that you can often lock in a mortgage rate up to six months before you actually need it! This can be a real game-changer in an unpredictable market. If rates are looking favourable now, you could secure a deal, giving you peace of mind.

Now, let’s explore how to navigate the market, whether you’re taking out your first mortgage, borrowing more, or securing your next mortgage deal.

What you need to know if you’re… buying your first home

Congratulations on getting mortgage-ready! 2025 presents some unique opportunities for first-time buyers. While saving a deposit remains a big hurdle, understanding the market can give you a real edge.

• Build a strong deposit: The bigger your deposit, the more attractive your options. Focus on building the strongest deposit you can, and remember schemes like the Lifetime ISA (LISA) offer a 25% government bonus on your savings, helping you save your deposit faster. Govt. withdrawal charge may apply. ISA and tax rules apply. For Stocks & Shares LISAs, capital at risk.
• Boost your credit score: Lenders reward reliability. A high score tells lenders you’re a trustworthy borrower and could help you unlock more competitive interest rates – which, on a brand new mortgage, could save you thousands over the term. Check your report, correct any errors, and make sure you’re on the electoral roll, if possible.
• Stress-test your budget: Even with potentially improving rates, think about your monthly payments in the long term. Could you comfortably afford them if rates were to rise slightly in the future?
• Get a Mortgage in Principle (MIP): This is a free estimate that shows sellers you’re a serious buyer and gives you a clearer idea of your budget. You can get a MIP for minutes in the Moneybox app, and it won’t affect your credit score!

Your home may be repossessed if you do not keep up repayments on your mortgage.
Moneybox Mortgages is provided by Moneybox Mortgages Ltd.

What you need to know if you’re… buying your next home

Moving up the property ladder comes with its own set of considerations. You’re balancing selling your current home with buying a new one, all while keeping an eye on the market.

• Plan your timeline: With the ability to lock in a new mortgage rate up to six months in advance, you can strategically plan your move. If you’re confident in selling your current property, securing a new mortgage offer early can reduce stress and protect you from potential rate increases while you sell.
• Use any equity wisely: If your home has increased in value, the equity can reduce your loan-to-value (LTV) ratio, potentially helping you access better rates. Get an up-to-date valuation on your current home to see where you stand.
• Bridge the gap if needed: If you need to complete on your new home before selling your old one, discuss ‘porting’ your existing mortgage (transferring it to the new property) or exploring bridging finance options with a broker. They can help you understand the most cost-effective way to manage the transition.
• Account for moving costs: Remember to factor in stamp duty and other costs when planning your move.

What you need to know if you’re… remortgaging

Around 1.8 million fixed-rate mortgage deals are set to expire in 2025, meaning many homeowners will be reviewing their options. Here’s how to stay ahead:

• Avoid the SVR trap: The most important thing is to avoid automatically rolling onto your lender’s standard variable rate (SVR) once your fixed term ends. SVRs are almost always significantly higher than new fixed or tracker deals, costing you more each month.
• Start early: Begin the remortgage process up to six months before your current deal expires. This gives you ample time to shop around, compare offers, and ideally, secure a great rate well in advance.
• Reassess your property’s value: Your home may have increased in value since your last mortgage application, potentially putting you in a better loan-to-value (LTV) band and qualifying you for lower rates. A broker can help you assess this.
• Consider your future goals: Are you happy with your current mortgage amount, or do you want to release some equity for home improvements, or to consolidate debt? A remortgage could be an opportunity to achieve these goals, but ensure you understand the long-term cost implications.

You may have to pay an early repayment charge to your lender if you remortgage.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Why work with a mortgage broker?

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

Provided by Moneybox Mortgages Ltd.

Navigating the mortgage market, especially with evolving rate predictions, can feel complex. That’s why one of the smartest moves you can make, no matter if you’re a first-time buyer, next-time buyer, or remortgager, is to speak to a mortgage broker – like the brokers at Moneybox Mortgages.

They have their finger on the pulse of the market, understand the rate landscape, and have access to deals you might not find yourself.

• Secure the right mortgage with a free, simple service and tailored advice
• Access thousands of mortgage deals from over 90 lenders
• Your own mortgage broker and case manager, here to help until completion

With the right knowledge and support, you’ll be able to navigate this year’s market with confidence!

Ready to explore your mortgage options with Moneybox Mortgages?

Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your lender if you remortgage.
Provided by Moneybox Mortgages Ltd.