The UK housing market in 2025 is showing signs of steady, if restrained, recovery. Mortgage approvals for house purchases rose 6% year-on-year in June, reaching 64,167—up 1% from May—indicating gradually improving buyer activity House of Commons Library. Lending data supports this cautious optimism: UK Finance forecasts residential purchase lending to grow by 10% in 2025 to around £148 billion, with remortgaging expected to bounce back by 30% UK Finance.
Falling interest rates are playing a key role. The Bank of England’s base rate has been cut to 4%, the fifth reduction within a year, easing pressure on tracker mortgage holders and lifting the appeal of new deals—some borrowers are now seeing two-year fixed rates dip below 3.8% The GuardianThe Times. Notably, two-year fixed rates recently slipped below five-year rates—a reversal unseen since 2022—signalling expected further rate cuts ahead Financial Times.
However, affordability remains stretched. Barclays reports renters are feeling the heat, with housing–related spending rising faster than inflation and only 12% expecting to buy within a year MoneyWeek. Meanwhile, relaxed mortgage rules—like Santander raising borrowing limits to 5.5 times income—have injected some buying power, especially among better-earning households The GuardianThe Scottish Sun.
On the property side, house price growth has moderated. The average price rose 3.9% year-on-year to May, with certain regions seeing double-digit gains GOV.UK. Nationwide and other forecasters suggest total 2025 price increases will land between 2% and 4% nationwidehousepriceindex.co.ukQuick MortgagesSavillsZoopla. Yet, analysts warn that “zombie listings”—lagging, relisted homes—may give a false impression of supply, masking underlying sluggish demand Homebuilding.
New housing delivery is improving: Bellway reported a 14.3% rise in completions, with forecasts for ~9,200 homes delivered in fiscal 2026, a boost for supply in H2 Reuters+1.
Summary: The mortgage market in 2025 is rebounding, supported by lower interest rates and relaxed lending rules. Property price growth remains modest, and while demand and delivery are improving, affordability constraints and cautious buyer sentiment persist.
