The UK mortgage market has been through a rough patch lately, with high interest rates, tightening affordability, and sometimes confusing lending criteria. But there are signals now that things might be starting to shift. For borrowers, that could mean some new product options and slightly more breathing space. Let’s take a look at what’s emerging, what’s improving, and what to watch out for.
What’s New / Emerging
-
Permanent Mortgage Guarantee Scheme (5% deposit)
As of mid-2025, the government launched a permanent Mortgage Guarantee Scheme. This is designed to keep 91–95% loan-to-value (LTV) mortgages on the table by offering lenders a government-backed guarantee. In practical terms, that means eligible first-time buyers and home movers may purchase a home with just a 5% deposit. GOV.UK -
Sub-4% Fixed Rates Returning
Some lenders are edging below the 4% mark again for fixed-rate deals, particularly at lower LTVs. For people with a solid deposit and good credit, this might open up more attractive options than we’ve seen in recent periods. -
Increased House Purchase & Remortgage Activity Forecast
Analysts anticipate steady growth in both house purchase and remortgage lending as affordability gradually improves. That suggests lenders are expecting more demand and potentially more competitive product offerings.
Why This Is Good News
These developments suggest a few positive trends:
-
Lower Deposit Barrier: The Mortgage Guarantee Scheme reduces one of the biggest hurdles for many people — raising a large deposit. A 5% deposit is much more accessible for many first-time or low-to-mid income buyers.
-
More Competition Among Lenders: As more lenders start offering rates below 4% (for appropriate borrowers), this can push down costs, or at least improve options. It means those who qualify may find better deals.
-
More Certainty/Options in the Market: Forecasts of increased lending and remortgage activity mean that market sentiment is slowly improving. While it may still be cautious, it’s a move away from the sharp squeezes of the past couple of years.
What Borrowers Should Keep in Mind
While there’s light, it’s not all clear skies. Here are things to watch and plan for:
-
Check Total Costs: A low rate is great, but fees, closing costs, or deferred interest (in some products) can erode the benefit. Always look beyond just the headline rate.
-
Deposit & Loan-to-Value: Typically, the better deals (rate-wise) are still reserved for those with larger deposits, good credit scores, etc. If you’re borrowing at higher LTVs, expect higher rates or tighter conditions.
-
Affordability: Just because rates have eased slightly doesn’t mean everyone can afford them comfortably. Make sure stress tests (e.g. rate rising) are part of your planning.
-
Government Schemes Have Conditions: Guarantee schemes come with eligibility rules. Not everyone qualifies, and sometimes there are restrictions. Read the fine print.
Clear Finance’s Take
If you’re in the position to explore a mortgage now, there’s reason to be cautiously optimistic. For those who have a decent deposit, good credit, or are ready to move or remortgage soon, some of these new products may offer favourable terms you didn’t see six months ago.
If you’re not quite there yet, it might make sense to use this period to get your finances in stronger shape: improve credit score, save more deposit, reduce debt. That way you’ll be ready to act when a good product comes along.
Want us to look over your circumstances and see which mortgage products might be possible for you? We can compare what’s available and what might be emerging soon, to help you make the best decision.
For more information about our Financial Services and products in Doncaster call 01302 835938
Please ’Like us’ on Facebook – https://www.facebook.com/clearfinance.net/