Market Update September 2025

The Bank of England has held Bank Rate at 4.00%. While two members favoured a small cut, the majority chose caution, with inflation still running at 3.8% in August — almost double the Bank’s 2% target. The decision reflects a desire to see clearer evidence that price pressures are easing before moving further.

 

For mortgage borrowers, this steady stance means no sudden changes in the short term. Lenders continue to watch market conditions closely. SONIA swap rates are currently around 3.68% (2-year) and 3.72% (5-year) — levels that suggest fixed-rate pricing will most likely shift only gradually.

 

Signs of recovery are appearing in the housing market: mortgage approvals have risen to their highest level in six months, while arrears have started to level off. Together, these point to a market that is stabilising, even if affordability remains tight.

 

For clients whose mortgage deal ends in the next 6–9 months, this is an important window to review options. Acting early allows borrowers to lock in certainty today while retaining flexibility to switch if conditions improve.

 

The Bank’s next major update comes in early November, alongside fresh forecasts that will guide how quickly rate cuts might follow. Until then, we expect lenders to continue making cautious, incremental adjustments — presenting opportunities for well-timed refinancing and careful planning.