The UK mortgage market is poised for a shift in 2025 as remortgage volumes are set to rise sharply. According to UK Finance, an estimated 1.8 million fixed-rate mortgages will reach the end of their term. Leading to increased activity in the remortgage sector.
Many of these deals were taken out during periods of much higher interest rates in 2022 and 2023. This means borrowers could now find themselves in a position to secure more favourable mortgage terms.
Some major lenders are introducing competitive sub-4% mortgage deals. Homeowners who previously faced less advantageous rates may now have an opportunity to reduce their monthly repayments and access better financial products.
Market overview: the impact of expiring fixed-rate deals
Recently, remortgaging activity has been subdued due to a combination of constrained affordability and a lower number of fixed-rate deals expiring. In 2024, external remortgaging fell by 10% to £59bn. While internal product transfers, transactions that do not require an affordability test, dropped by a more modest 7% to £224bn.
However, 2025 is expected to bring a marked reversal. As affordability pressures ease and more fixed deals come to an end, UK Finance anticipates that remortgaging volumes will increase by 30% to £76bn.
Product transfers are also forecasted to rise by 13% to £254bn. Many borrowers may seek to secure new deals without undergoing additional affordability assessments.
The opportunity for borrowers is that the mortgage rate environment has changed significantly since they first secured their deals.
Some of the fixed-rate mortgages coming to an end in 2025 will be 5-year fixes taken out in 2020. Interest rates were at historic lows, benefiting from a Bank of England base rate as low as 0.10% in 2020. 3-year fixed-rate deals from 2022 and 2-year fixes from 2023 will also be maturing.
Borrowers from these later periods will find the current remortgage market more favourable. Rates during 2022 and 2023 hit highs not seen since 2010. Due to the rising inflation hitting a 41-year high and Bank of England rate hikes.
However, recent developments in 2025 have introduced more competitive mortgage products. Major lenders, such as Nationwide, HSBC and Barclays, have begun offering sub-4% mortgage deals.
This shift could provide relief for some borrowers. Particularly those whose previous deals were fixed at less favourable rates in 2022 or 2023. As a result, lender switching may increase as customers seek out better deals, and affordability assessments will remain a key factor in securing new mortgage terms.
What this means for the remortgage industry
From an operational standpoint, the surge in remortgage activity presents both opportunities and challenges. The increased volume of applications will place added pressure on service providers to process transactions efficiently while maintaining high standards of customer service.
One major consideration will be the growing number of borrowers seeking to switch lenders. While internal product transfers remain a popular option, particularly for those who wish to avoid affordability tests, higher rates could encourage more homeowners to shop around for better deals.
This could lead to increased competition among lenders, with some offering more flexible products or incentives to attract switchers. For conveyancers and legal service providers, the anticipated increase in external remortgages means preparing for a higher caseload.
Ensuring smooth and timely transactions will be key to meeting borrower expectations and preventing delays that could lead to costly reversion rates. Technology-driven solutions, such as digital conveyancing platforms and automated workflows, will play an essential role in handling the increased demand efficiently.
Key trends to watch
1. Increased lender switching. With higher rates now a reality, many borrowers will actively seek better deals rather than simply accepting their current lender’s product transfer offer.
2. Competitive pricing strategies. Lenders may introduce new incentives, including cashback deals or fee-free remortgages, to attract customers who are looking to switch.
3. Affordability challenges and advice demand. Despite an improvement in affordability forecasts, some borrowers will still face financial strain, increasing demand for mortgage advice.
4. Technology and efficiency gains. The remortgage process will likely continue evolving, with digital innovations helping to streamline legal and administrative workflows.
The sharp rise in remortgage volumes expected in 2025 will create a dynamic and competitive market.
While internal product transfers will remain a significant segment, the potential for increased lender switching could drive greater innovation and competition.
From an operational perspective, the industry must be prepared to handle this surge efficiently, leveraging technology to ensure a seamless experience for borrowers.
As we move through the year, staying ahead of these market trends will be crucial. For lenders, brokers, and legal service providers alike.
The ability to adapt and offer competitive, customer-focused solutions will define success in what promises to be a busy period for the mortgage industry.
Warren Martin, Director of Operations
