Rising Home Loans in the UK in 2025: What Buyers Need to Know

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Mini house model on mortgage application form with UK flag in background.

 

The UK mortgage market is seeing significant shifts in 2025. As interest rates slowly ease and consumer confidence returns, home loan applications are climbing and lenders are vying for business. For anyone looking to buy a property, remortgage, or even invest, understanding the changing landscape now can make a big difference.

Changing Lending Conditions and Borrowing Trends

After years of sluggish growth, the UK mortgage market is forecast to pick up pace. According to the latest outlook from EY ITEM Club, net mortgage lending is expected to more than double in 2025 compared with 2024 — rising from about 1.5% growth to around 3.1%. EY+1 This renewed activity comes even though borrowing remains tightly constrained by affordability requirements and higher house prices.

At the same time, data from UK Finance show a sharp increase in later-life lending. In Q1 2025, loans to borrowers aged over 55 rose by 33.5% year-on-year, reaching £6.1 billion in value. Mortgage Professional In effect, more people at all life-stages are seeking home loans or switching existing deals.

What This Means for Borrowers

For someone looking to take out a home loan in the UK, several trends matter:

  • Interest rates: While rates remain elevated compared to the years of ultra-low borrowing cost, there are signs of moderation and competition among lenders. Houz+1

  • Loan-to-Value (LTV) and deposit size: Many first-time buyers still face high deposit requirements, and lenders remain cautious for higher LTV deals. Homebuilding

  • Product choice: Shorter fixed-term deals are becoming more popular. One study noted that 2-year fixed mortgages overtook 10-year deals in popularity. Kerr & Watson

  • Remortgaging: With many fixed deals expiring and borrowers seeking better terms, remortgage volumes are forecast to jump significantly in 2025. Mortgage Finance Gazette+1

Smart Move for Buyers in 2025

If you’re planning to get a home loan in the UK this year, here are key steps smart buyers are taking:

  • Shop around and compare deals early: With competition increasing among lenders, you may find more favourable rates, especially if you have a good deposit and strong income.

  • Focus on affordability: Even as rates ease, the cost of living and other financial commitments may affect your borrowing capacity. Be realistic about what you can afford.

  • Consider fixed-rate deals: If you expect rates to remain stable or rise, locking in a fixed rate now can protect you from future increases.

  • Think ahead to remortgage: If your current deal is ending soon, it might pay to review options now rather than waiting.

  • Stay flexible: With housing market and economic conditions still changing, choose a loan product that doesn’t leave you exposed to unexpected costs or locked into unfavourable terms.

Looking Ahead

The UK housing market still faces headwinds — high house prices, tight supply, and pressure on household budgets. Yet the fact is: home loans are becoming more accessible in 2025, and lenders are preparing for growth again. For buyers, the window may be opening.

As the year progresses, staying informed will help you make the right borrowing decision rather than reacting to market shifts. With the right strategy, you could secure a home loan deal that works for you in this evolving environment.

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