Remortgaging in 2025: Should you switch or stay?

26 Feb Remortgaging in 2025: Should you switch or stay?

In 2025, many UK homeowners are facing a crucial decision. With an estimated 1.8 million fixed-rate mortgages set to mature this year, understanding the current mortgage landscape is essential for making an informed choice.

Current Mortgage Landscape

As of February 2025, the Bank of England has reduced its base interest rate to 4.5%, down from a peak of 5.25% in August 2024.

This reduction has led to more competitive mortgage rates, with average two-year fixed-rate mortgages at 4.65% and five-year fixed-rate mortgages at 4.4%.

However, recent economic indicators show that inflation has risen to 3%, surpassing the Bank of England’s 2% target.

This unexpected increase has led to concerns that the Bank may halt further rate cuts, potentially causing mortgage rates to rise again. In response, some lenders, such as Santander, have withdrawn sub-4% mortgage deals.

Should You Remortgage Now?

Given the current economic climate, remortgaging in 2025 could be a prudent move for many homeowners. Here are some factors to consider:

• Expiring Fixed-Rate Deals: If your fixed-rate mortgage is ending this year, you may face higher interest rates upon renewal. Remortgaging as early as six months in advance could allow you to lock in a better rate before potential increases.
• Variable-Rate Mortgages: Homeowners on variable rates might consider switching to a fixed-rate mortgage to gain payment stability, especially with the possibility of rising rates due to inflation.
• Equity and Property Value: With the average UK house price now at £290,000, up from £80,000 in 2000, increased property values may provide more equity, potentially qualifying you for better mortgage deals.

Steps to Take

1. Assess Your Current Mortgage: Review your mortgage terms, remaining balance, and the end date of your current deal.
2. Monitor Interest Rates: Stay informed about the Bank of England’s base rate and lender offerings, as these directly impact mortgage rates.
3. Consult a Mortgage Advisor: A professional can provide personalized advice based on your financial situation and help navigate the remortgaging process. A broker can also secure you the best rate today but monitor right up to the end date if there is a better deal.
4. Consider Timing: With potential rate fluctuations, acting sooner rather than later may secure more favourable terms, with the opportunity to review again. Often banks will only share the switch rates 4 months in advance but you are able to start applications with other lenders 6 months in advance.

Remortgaging in 2025 presents both opportunities and challenges. While current rates are relatively low, economic factors like rising inflation could lead to increased mortgage costs in the near future. Evaluating your financial situation, staying informed, and seeking professional advice are key steps to making the best decision for your circumstances.

Get in touch with our team to find out how we can help you secure the best possible deal for your mortgage. We will conduct a no cost no obligation review of your circumstances and advise if you are best placed to stay with your existing lender or change to a new provider.

Book a call with a member of our team: https://calendly.com/d/crcr-w23-hbv

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.