Mortgage market update | August 2025

We’re heading into late summer with a bit more optimism in the air. Prices are nudging up, mortgage rates are easing, and more lenders are opening the door to borrowers with flexible criteria. It’s still very much a buyer’s market in many areas. Here’s what you need to know this month:

House prices rise again, but buyers still hold the power

After falling by 0.8% in June, house prices recovered slightly in July, rising by 0.6% according to Nationwide. That takes annual price growth to 2.4%, up from 2.1% the month before. The average UK home is now valued at £272,664.

Affordability is also improving. The house price to earnings ratio has dropped to around 5.75 times income, the lowest it has been in over a decade. This is due to steady wage growth and softening mortgage rates, with a typical five-year fixed deal now around 4.3% for borrowers with a 25% deposit.

Even with the rebound in prices, buyers still have the advantage in many areas. More listings, slightly cheaper borrowing, and a more cautious approach to bidding mean sellers are having to meet the market. Experts suggest this balance is likely to continue through the rest of the summer.

Mortgage rates edge down as lenders ease criteria

Mortgage rates have continued their gradual decline, with several lenders cutting fixed rates in July and early August. Rates just above or even below 4% are now reappearing for borrowers with strong profiles.

At the same time, lenders are quietly easing some criteria. Affordability thresholds are improving, loan-to-income limits are edging up, and product choice is widening. For clients with existing applications or those approaching the end of a fixed deal, this could be a good time to revisit options.

With the next Bank of England base rate decision due shortly and inflation continuing to fall, expectations are building for further rate cuts later this year.

Nationwide lowers income criteria on 6x lending

Nationwide has responded quickly to recent regulator guidance, making its Helping Hand mortgage available to more first-time buyers. From mid-July, minimum income requirements have been reduced to £30,000 for sole applicants and £50,000 for joint.

Helping Hand allows borrowing up to 6 times income on five- and ten-year fixed rates, up to 95% LTV. Buyers also benefit from £500 cashback on completion, with additional cashback for energy-efficient homes.

This change could make a real difference for buyers in higher-cost areas, particularly those with lower deposits and strong affordability.

New buy-to-let products from Metro and BM Solutions

Two lenders have launched fresh options for landlords this month. Metro Bank has entered the HMO and Multi-Unit Freehold Block space, offering products up to 75% LTV for up to 6 tenants or units. These are available for both personal and limited company borrowers, with student lets and tenants on benefits considered.

Meanwhile, BM Solutions (part of Lloyds Banking Group) is now offering Limited Company buy-to-let mortgages with automated DIPs and a streamlined application process.

For landlords seeking better returns or expanding their portfolio, these new launches offer more flexibility and faster turnaround times.

Risk warnings

Your home may be repossessed if you do not keep up repayments on your mortgage