The Intermediary – March 2025 - Flipbook - Page 16
SPECIALIST FINANCE
In focus
Is 2025 the year of
T
he mortgage landscape
is shiing, and 2025
is shaping up to be a
significant year for
remortgaging. Simply
put, a remortgage is
replacing the existing mortgage with a
new one, and several different factors
prompt homeowners to reconsider
their current mortgage positions.
During the pandemic, many
homeowners secured fixed-rate
mortgages. These terms, oen 5-year
deals, will begin to expire in 2025,
forcing homeowners to seek new
arrangements.
Interest rates have risen
considerably since then. In 2021, the
average mortgage rate in the UK was
at 2.96%. Even with the recent Bank
of England interest rate cut, there is
still a substantial difference between
today’s rate and those in the prepandemic era.
This increase means many
homeowners will face much higher
rates when their fixed terms end. This
rate difference will be particularly
acute for those coming off 5-year
terms. Conversely, those coming off
2-year terms now may see new rates
that are lower. This contrast could
change the dynamic of locking in for
longer terms.
Economic factors
The higher interest rates compared to
five years ago is not the only economic
factor that is contributing to the
expected remortgage boom.
The latest UK GDP figures paint
a picture of remaining uncertainty,
slow growth of 0.8% – compared
to the US’ growth of 2.8% – shows
that the UK’s recovery remains
sluggish at best.
While technically the UK isn’t in
a recession, many homeowners
are still confronting the cost-ofliving crisis.
Inflation rising to 3% and the
constant rise in household expenses
like the costs of food, energy
and water along with rising
Council Tax continue to put a strain
on household budgets.
Given these economic factors,
it’s certain that homeowners are
considering remortgage for a number
of reasons, three of which are:
Stability: Homeowners would like
to lock in a new deal to give clarity
and confidence on what their
mortgage costs will be over the next
few years.
Reduce costs: A remortgage may
move a homeowner to a lower
interest deal which will reduce their
monthly housing expenditures.
Access equity: Some homeowners
will consider a remortgage to take
some capital out of their property
to fund.
to remortgage to handle unexpected
expenses or to unlock equity for other
investment opportunities.
Shifting demographics
Finding the right lender
In 2025, the UK housing market is
expected to impact the remortgage
proposition. As the lack of new
housing and the potential stagnation
or decreasing of home prices remain,
some homeowners may consider
remortgaging sooner to secure
favourable deals.
Beyond market conditions,
demographic trends and evolving
homeowner behaviours are also
key factors in the projected 2025
remortgage surge.
An ageing population may seek
to remortgage to manage payments
as they approach retirement, or to
access funds for retirement needs.
Simultaneously, younger generations
entering the housing market may
face financial challenges, leading
them to remortgage for
beer terms.
There’s also a growing
emphasis on financial
flexibility, with many
homeowners opting
All these combined factors suggest
that 2025 will likely see a surge
in remortgaging in the UK, and
homeowners and intermediaries may
be considering which the best lender
for them will be. For many, it may no
longer be the high street banks.
If there are any lessons to
learn from the past few years,
circumstances can change through
no fault of their own, and they may
no longer fit the criteria of high
street lenders.
Unlike banks, which
are constrained by
risks, building societies
and alternative lenders
like LendInvest could
be the right options
for homeowners
SOPHIE KETTLE
is commercial director
at LendInvest
