Mortgage market update | December 2025

Welcome to the final monthly newsletter of the year. I keep finding myself saying to clients, “Where has the year gone?” It genuinely feels like two minutes ago I was dragging the Christmas tree out for collection and shoving the decorations back into the attic. Yet here we are again, with another tree bought at the weekend and the decorations coming back down. Amid all of that, the past month has brought several positive updates from lenders, the base rate has been held again, and of course we also had the small matter of the Autumn Budget, which we covered in a separate update if you missed it. Link to previous update here.

Base rate held again with a narrow vote

The Bank of England has held the base rate at 4% for another month. While the decision itself was expected, the vote was extremely close. Four out of nine committee members voted for a cut, which is a sign that we may start to see movement early next year if inflation continues to soften.

The message is steady for now, but the tone continues to lean in a more positive direction for borrowers. 

Lenders continue to expand Interest Only options

A clear trend this year has been more flexibility around Interest Only borrowing. Several lenders are widening the types of acceptable repayment strategies and increasing the maximum loan to value, which can offer useful options for clients who need a more tailored approach.

Nationwide has now added more repayment plans such as UK savings, investments, pensions and the sale of another UK property. Interest Only is also now available to first time buyers. Their maximum loan to value is 75%, or 85% for part and part borrowing.

NatWest has made similar improvements. Sale of main residence Interest Only is now allowed up to 75% LTV, other investment strategies up to 80%, and part and part up to 85%. They have also increased their new build limits, with houses now available up to 95% and flats up to 90% LTV.

These changes mean more flexibility and more choice, especially for clients who want a structure that gives them more room in their monthly budget or who want a different approach to how they repay their mortgage over time.

HSBC Increases loan to Income to 6.5x income

HSBC has made a notable change to its lending policy by increasing its loan to income limit to 6.5x income for eligible Premier customers. This applies to applications up to 90% loan to value.

To benefit from the higher loan to income option, at least one applicant must hold a HSBC Premier account at the point of application. For those who qualify, it could offer a meaningful increase in borrowing power, particularly in higher cost areas.

Halifax eases criteria for Non-UK nationals

Halifax has introduced some positive changes for Non-UK nationals who want to buy a permanent home in the UK. The minimum income requirement has been lowered for applicants who have lived in the UK for at least one year. It is now £50,000 for a sole applicant or £75,000 for joint applicants.

For applicants who have been in the UK for less than a year, Halifax can still lend if they meet the previous income levels or if the loan to value is no more than 75%. This is a welcome update that broadens access for clients settling in the UK and looking to buy their first or next home.

Risk warnings

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