In 2025, the UK housing market is showing signs of renewed optimism, with falling mortgage rates, relaxed lending rules, and a wider variety of competitive deals available to homebuyers. Whether you’re a first-time buyer or looking to remortgage, understanding the latest trends and offers in the mortgage market can help you make smarter, more cost-effective decisions. Here’s a detailed guide on the best mortgage deals in the UK right now and what you need to know before locking into a deal.
Falling Interest Rates Signal Relief for Borrowers
After a turbulent few years of rising rates, the Bank of England has finally started to ease monetary policy. The base rate now sits at 4.25% as of May 2025, down from its peak in 2023. This move has sparked a notable decrease in mortgage interest rates, with several lenders offering two-year fixed deals below 4%.
For instance, HSBC is currently offering a 2-year fixed rate at 3.91% for 60% Loan-to-Value (LTV). This makes it one of the most attractive deals for buyers with a larger deposit. The trend is expected to continue, with market analysts forecasting further rate reductions later in 2025 if inflation remains under control.
Top Mortgage Deals in 2025
1. HSBC – 2-Year Fixed at 3.91% (60% LTV)
-
Arrangement Fee: £999
-
Revert Rate: 6.74%
-
Best For: Buyers with a substantial deposit who want short-term predictability.
2. Nationwide – 10-Year Fixed at 5.09% (80% LTV)
-
Arrangement Fee: £999 (can be added to the mortgage)
-
Incentives: £500 cashback for first-time buyers
-
Best For: Buyers seeking long-term stability and peace of mind.
3. The Cumberland – 5-Year Fixed at 5.4% (85% LTV)
-
Arrangement Fee: £0
-
Early Repayment Fee: £110
-
Incentives: £100 cashback for switching current accounts
-
Best For: Buyers with moderate deposits who want to avoid upfront fees.
These deals reflect a competitive lending market where banks are eager to attract new customers. Notably, lenders are offering a mix of short-, medium-, and long-term fixed-rate options, giving buyers flexibility depending on their financial outlook.
Relaxed Lending Criteria and Higher Affordability
In response to government pressure and market demand, several high-street lenders—including Barclays, Halifax, Santander, and HSBC—have relaxed their affordability stress tests. This move means that many buyers can now borrow significantly more than they could a year ago—up to £30,000 extra in some cases.
By reducing the rate at which applicants must prove they can afford repayments under hypothetical stress scenarios, lenders have opened the door for more people to get on the property ladder or move up it.
Stamp Duty Updates
Stamp duty thresholds were updated in April 2025. The nil-rate threshold for all buyers remains at £125,000. However, first-time buyers now benefit from a zero rate up to £300,000, down from the previous £425,000 threshold.
Here’s the updated stamp duty structure:
-
0%: Up to £125,000
-
2%: £125,001 to £250,000
-
5%: £250,001 to £925,000
-
10%: £925,001 to £1.5 million
-
12%: Over £1.5 million
These changes slightly increase the tax burden for first-time buyers in higher-value areas but still offer relief on lower-cost properties.
Tips for Securing the Best Deal
-
Compare Offers Early – Mortgage offers are often valid for up to six months. Locking in early can protect you from future rate hikes.
-
Consider Fixed Rates – With inflation still a factor, locking in a fixed rate can offer budget certainty.
-
Use a Broker – Mortgage brokers can help you navigate the wide range of products and secure exclusive deals.
-
Explore Government Schemes – Options like the 95% Mortgage Guarantee Scheme and LISA savings accounts can be valuable, especially for first-time buyers.
Final Thoughts
The mortgage landscape in 2025 is increasingly favorable for borrowers, thanks to falling interest rates and more generous lending conditions. Whether you’re buying your first home or looking to refinance, now is a strategic time to assess your options. Stay informed, act early, and shop around to find the best deal that fits your financial goals.