Twinkly lights and trees are up, presents are being bought and wrapped, and the big man himself is getting ready to do the night shift. It can only mean one thing – Christmas Day is almost here and 2025 is quickly rushing towards its festive finale.
At this time of year, we naturally find ourselves looking back on the past 12 months, as well as what the future might bring. That is especially true for those interacting with the mortgage and property market, whether that’s home buyers, movers or those remortgaging.
So what were the key headlines and moments from 2025 and what should we be looking out for as head into 2026?
Stamp duty deadlines
Much of the focus at the start of 2025 centred around the changing of stamp duty thresholds, with key relief ending for movers and first-time buyers at the end of March. This naturally created a sense of urgency among buyers and movers as they looked to avoid additional costs and maximise their budgets – fuelling mortgage approvals and property transactions in the process. This certainly kicked off the year with a bang.
Thank you President Trump?
Despite stamp duty relief ending, the property market didn’t exactly go quiet. While a lull was expected as the cost to buy or move increased, May actually saw an increase in both mortgage approvals and property transactions. The same was true in June too.
A key driver at the time was lower mortgage rates – driven in part by none other than Donald Trump. The US President’s announcement of significant tariffs on its trading partners sent international markets into a frenzy. With the UK set to be impacted, financial markets predicted that the Bank of England would need to drive growth in response and speed up the rate of interest rate cuts. There was a growing confidence – including from the likes of the IMF – that the UK would see three cuts to the base rate in 2025.
This had a positive impact on swap rates – which help lenders determine the rates and pricing they can offer on their mortgage products. A base rate cut in May soon followed and only helped drive lender activity and competition. However, this expectation of accelerated interest rate cuts proved to be short lived.
A more cautious picture
Higher than expected inflation figures in June spooked the central bank and surprised financial markets. The Bank of England emphasised greater caution and the case for aggressive rate cuts became less straightforward. This forced markets to dial back their forecasts and expectations, shifting from three or four more cuts in the year, to just one or even two more. As a result, swap rates crept back up slightly and so did the mortgage rates on offer.
We did see a subsequent cut in August, bringing the base rate down to 4% – although this turned out to be a knife-edge 5-4 decision as the central bank had to balance rising inflationary pressures with the need to support the economy.
Budget hesitation
As we headed into September, the Government announced that the Autumn Budget would take place very late – right at the end of November. Ahead of the Budget, there was plenty of political kite flying and rumours being circulated – most notably, a potential overhaul of stamp duty which would see it replaced with an annual property tax on homes over £500,000.
With potential property tax changes being mooted, along with other reported tax rises and spending cuts, it naturally created some hesitation in the property market. With the chance to save some money, many of those who wanted to buy or move, naturally put their plans on ice. As we saw though, no such change to stamp duty was ever announced.
Improving inflation drives mortgage reductions
In recent months though, the market has seen a softening of fixed mortgage rates once again, driven in part by inflation likely peaking and subsequently improving – as well as increasing competition and speculation around the future path of interest rates. As of early December, some lenders have been offering two- and five-year fixed deals below the 5% mark, the lowest level since late 2022.
That shift signals renewed confidence among lenders that the base rate may well be heading downwards, or at least conditions are stabilising enough to support more competitive pricing. For borrowers, this presents an opportunity. For those shopping for around for a mortgage, it may be worth exploring what’s on offer to suit your needs and circumstances. In this situation, expert advice becomes absolutely critical in navigating an ever-changing mortgage market and exploring all the options available to you.
Product transfers outperform remortgages
Nowhere is that more true than those coming to the end of their fixed-rate deal. This year has been another high year of mortgage maturity – particularly among those coming off much more favourable COVID-era mortgage rates. Despite rates improving this year, payment shocks are still a very real reality for many borrowers.
With affordability remaining stretched among many borrowers, product transfers with existing lenders continue to be the primary route to refinancing – rather than a full remortgage with a new lender. According to UK Finance, product transfers have accounted for 82% of all mortgage refinancing so far this year. Although, it did recognise that this was increasingly due to the efficiency of a PT, rather than affordability concerns. With the help of an expert adviser, those set to remortgage can review both options and decide which best fits their needs and circumstances.
Looking ahead
With the Budget now out of the way, there is growing expectation that buyers and movers will push ahead with plans – perhaps scouting out their options over the festive break. This is particularly true with Boxing Day often being the busiest day for property searches via Rightmove.
Both buyers and movers will be buoyed by the early Christmas present from the Bank of England and another cut to the base rate. As swap rates react positively to this news, lenders will likely respond with more competitive fixed-rate deals, encouraging action among both buyers and movers. It will also be welcome news for those set to remortgage.
Combine these factors with increasing innovation and easing of affordability rules by lenders and the prospects for buying or moving in 2026 look promising. With the year nearly finished, now is the ideal time to reflect on your personal situation. Whether you’re looking to secure your first mortgage, planning to move, or getting set to remortgage, having a clear picture of your options is absolutely essential.
Seeking expert advice is a great way to explore all the options available to you, allowing you to make an informed decision based on your needs and circumstances. While we may not be able to predict 2026 with any real certainty, speaking to a qualified mortgage adviser now can help you plan ahead and be ready to make the right move when the time comes.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Approved by The Openwork Partnership on 16/12/25.