Podcast: An update on the mortgage market

On this week's episode of the ESPC Property Show, Paul & Megan are joined by two of the ESPC Mortgages team, David Lauder & Lisa Bell. Along with providing an update on the current mortgage market, they discuss the average mortgage interest rate at the moment, moving up the property ladder and provide advice on remortgaging.

Watch the episode here↓

Listen to the episode on Spotify or Apple Podcasts or watch the episode on YouTube

Key Insights

Mortgage rates easing after base rate cuts

Lenders have responded positively to recent Bank of England base rate cuts, with average 2-year and 5-year fixed deals now sitting around 4 - 4.5%. Interestingly, there’s little difference between the two terms at present. Buyers are advised to look beyond headline rates, as the lowest advertised deals often come with high product fees or steep deposit requirements.

Greater affordability & borrowing capacity

With reduced stress tests, borrowers can now access more funds compared to six months ago. Lending multiples have shifted from 4 - 4.5 times income up to 5 - 6 times in certain cases, especially under schemes like Nationwide’s “Helping Hand.” While stricter FCA rules mean reckless lending practices won’t return, this change is providing a boost to first-time buyers and movers alike.

Moving up the ladder becoming more accessible

Homes are now selling closer to their Home Report valuation, which reduces the risk of bidding wars. Although sellers may walk away with less equity, higher borrowing capacity can help bridge the gap for those upgrading. This creates a more balanced environment for movers compared to the overheated market of recent years.

Remortgaging and valuation pitfalls

Desktop valuations used for product transfers can sometimes underestimate a property’s current value, pushing borrowers into a higher loan-to-value band with less favourable rates. Clients are encouraged to challenge valuations with evidence of improvements. Those nearing the end of a fixed deal should start exploring options at least three months early and consider locking in a rate for security.

Million-pound mortgages and high-net-worth buyers

Large loans follow the same FCA rules but often benefit from more personalised support through specialist “premier teams.” Wealthier borrowers are less affected by the cost-of-living squeeze, sometimes enabling borrowing multiples of 5 - 6 times income. However, strict income evidence remains a requirement, especially for self-employed clients.

Buyer mistakes to avoid

A common error is making an offer on a property before confirming affordability with a broker. Online calculators often give misleading figures, leading to stress and miscalculations around deposits. Speaking with an advisor upfront ensures buyers understand their true borrowing power and monthly commitments.

Busting mortgage myths

The episode highlighted that lenders are more open than many assume. Good financial habits - paying bills on time, saving regularly, and showing consistent rent payments - all strengthen applications. Some niche 100% mortgage products even exist for renters with strong histories, such as Skipton’s scheme.

Market outlook for 2025 – 2026

The panel expects further base rate cuts, with hopes that rates could fall below 4% and potentially reach 3% next year, depending on inflation. The general outlook is cautiously optimistic, with affordability improving and lenders “open for business.” Buyers were advised to prepare early, keep finances in order, and consult a broker well before applying.

The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.

The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.

ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.