2025 Mortgage Trends: What to Expect in the Future of Home Financing!

The Intermediary Mortgage Lenders Association (IMLA) forecasts a robust lending boom in 2025, with an encouraging surge in intermediary business and a vibrant remortgaging scene. This is your chance to be part of the action!

According to the latest findings, the share of mortgage transactions through intermediaries is on an upward climb, expected to leap from 87% in 2024 to an impressive 89% in 2025, reaching a historical high of 91% by 2026!

What does this mean for you? Gross mortgage lending is projected to rise from £237.5 billion in 2024 to a staggering £275 billion in 2025, with house purchase lending set to hit £177 billion, while remortgaging is anticipated to bounce back to £88 billion. All signs point to a thriving market!

This growth is fueled by the anticipated drop in interest rates and a surge in demand for remortgaging as affordability begins to improve. Currently, new borrowers are allocating roughly 15.5% of their income to mortgage interest—this figure is poised for a slight decrease, potentially unlocking more remortgage opportunities for the 1.8 million borrowers reaching the end of their fixed-rate deals in 2025.

Moreover, IMLA predicts that a whopping 70% of the increase in gross mortgage lending will stem from house purchases, while buy-to-let (BTL) lending is also expected to soar by 14% to £38 billion, climbing to £42 billion in 2026.

In a refreshing turn of events, the anticipated rise in arrears over 2.5% of loan balances has begun to decline, with expectations to continue this positive trend through 2025. IMLA’s executive director states, “After a whirlwind of economic challenges, the landscape is stabilizing, and the housing and mortgage sectors are adapting remarkably well to the ‘new normal’ following a decade of ultra-low interest rates.”

2025 is shaping up to be a year of stability and modest growth. For brokers, this shift from Product Transfers to remortgaging offers a prime opportunity to assess clients’ needs thoroughly, ensuring they find the best solutions available.

BTL landlords are also navigating increased regulations and taxes, seeking to optimize their operations. Many will turn to professional guidance, and with rates dropping, a substantial proportion of remortgagors will soon find themselves in a favorable position.

The landscape is shifting, and mortgage advisers will play an indispensable role in guiding borrowers toward tailored solutions that meet their unique needs. With the share of business funneled through intermediaries likely to break the 90% barrier in 2026, the time to act is now!

Cautious optimism surrounds 2025, as the base rate is projected to decrease, paving the way for lower mortgage rates. This environment is ripe for activity, with many borrowers seeking to refinance existing portfolios, particularly within the BTL sector.

However, the real surge may come from limited company BTL structures, as landlords increasingly explore tax-efficient alternatives to traditional ownership. This strategic pivot not only helps landlords manage rising costs but also unlocks new paths for growth in an evolving market.

While some industry leaders express tempered expectations, the overall sentiment remains bright. With inflationary pressures easing and potential wage increases on the horizon, many buyers will find improved affordability moving into the new year.

As we look ahead, the market is expected to remain resilient, with transaction levels projected to stay below long-term averages, yet the opportunities for growth and collaboration are plentiful. Expect a robust push from first-time buyers eager to close deals before critical deadlines, ensuring a vibrant start to 2025.

In this pivotal year, the role of brokers will become even more essential as they navigate increasingly complex circumstances for borrowers. This landscape thrives on expertise and adaptability, reflecting the growing reliance on brokers to deliver optimal outcomes for clients.

So, are you ready to embrace the wave of opportunities in 2025? The future is bright, and the mortgage market is ready for your involvement!