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Remortgaging in 2025: how the landscape has changed since the race for space

 

"We’re committed to supporting homeowners through the current transition in the market."

Andrew Asaam
Homes Director, Lloyds Banking Group
Published on: 29 July 2025
4 min read

As we move through the second half of 2025, the UK remortgage market is undergoing a significant transformation. The landscape today is shaped by the maturing of fixed-rate mortgage deals secured in the pandemic-era ‘race for space’. 

We’re now in a new period of higher interest rates and evolving customer behaviours. At Lloyds Banking Group we’re closely monitoring these shifts to ensure we support our customers through what is, for many, a pivotal financial moment.

What does the remortgage market look like today?

To understand today’s remortgage market we need to look back on what the broader mortgage market looked like during COVID-19. At that point in time central banks worldwide intervened to stimulate economic activity and support financial stability, resulting in interest rates reaching historic lows. Five-year fixed mortgage deals were available at rates between 1.0% and 1.9%. This environment triggered a surge in borrowing, as homeowners locked in low-cost deals amid a ‘race for space’ driven by remote working and lifestyle changes.

Fast forward to 2025, and those five-year fixed-rate deals are now maturing. At the same time, the Bank of England base rate has risen from an historic low of 0.1% in COVID-19 to 4.25% today with typical remortgage rates now sitting between 3.8% and 4.2% for consumers with loan-to-value (LTV) ratios under 70%. While this represents a potentially significant increase in monthly payments for many, the market has, reassuringly, stabilised compared to the volatility seen in 2023 when product rates for the same consumers peaked at over 5%.

We expect the remortgage market to remain buoyant into 2026, driven by the continued maturity of these pandemic-era loans. Our forecast suggests a total mortgage market of around £280 billion this year – up from earlier estimates of £260 billion – with remortgaging playing a central role.

Borrowers coming to the end of their current mortgage rate are responding in a few key ways. One strategy is extending mortgage terms to manage affordability. While this can be an effective short-term solution for managing monthly payments, because of the additional interest incurred over longer terms, we always encourage customers to reduce their term when possible.

We’re also seeing a strong preference amongst our existing customers for switching to a new mortgage deal with us – which is known as a product transfer – rather than changing their lender. While many customers come to us directly, brokers continue to play a vital role in supporting remortgage decisions, and whether switching directly or via a broker, we aim to make the journey simple and transparent. Our product transfer journey can be completed in as little as 15 minutes, and our digital platform offers a fast, intuitive experience for confident borrowers who are familiar with the mortgage application process.

 

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How are customers adapting to higher mortgage rates?

Despite the challenges, most borrowers are adapting well to the changes in interest rates, with industry-wide arrears rates remaining at near historic lows. The majority of borrowers coming off low fixed rates are managing the transition, thanks in part to responsible lending practices which ensure that people can afford their monthly mortgage payments when rates do increase. This has helped ensure that even with today’s rates, which are higher than they were in 2020, most borrowers still find their payments manageable.

That said, we recognise that some customers are facing real financial pressure, not necessarily due to mortgage rates but perhaps due to changes in life circumstances such as illness or unemployment. And we’re committed to offering tailored support, whether through our mortgage advisors, digital tools, or flexible product options.

 

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Affordability remains a key concern, particularly for younger homeowners and those facing higher living costs. Remortgaging can be a powerful tool to ease financial pressure. By switching to a more suitable product or adjusting the mortgage term, customers can better align their payments with their current circumstances.

We also see remortgaging as an opportunity for wider financial planning. Some customers are choosing to overpay, reducing the mortgage balance before transitioning to higher rates. Conversely some homeowners remain in the position to be able to borrow more, often for home improvements, investing in the value of their property. 

Leveraging technology and data to improve the remortgaging experience

Technology is at the heart of our strategy to enhance all areas of people’s mortgage experience, whether someone is a first-time buyer, homeowner or looking to downsize. Our digital remortgage journey is designed for speed, simplicity, and transparency. Customers can explore rates, check eligibility, and complete the process online; all with the confidence that comes from dealing with a trusted provider. These customers often having checked market rates through a money aggregator site before they come to our pages.

Behind the scenes, we’re using what we know about our customers to personalise the experience, anticipate needs, and streamline processes. Our goal is to make remortgaging as smooth as possible. We also work closely with brokers to ensure consumers in that channel have access to our products and can make informed decisions based on their unique needs.

"Despite the challenges, most homeowners are adapting well to the changes in interest rates, with industry-wide arrears rates remaining at near historic lows."

Emerging considerations in the remortgage market

While the remortgage market is stable, there are considerations that are worth making. One is the potential for affordability constraints to limit customer mobility, particularly if borrowers feel unable to switch lenders due to stricter stress testing or credit checks.

Fortunately, recent regulatory changes are helping, but there’s still work to do in refining policies to ensure they’re effective and inclusive.

We also need to remain vigilant about broader economic risks. While inflation has moderated, global uncertainties – from geopolitical tensions to supply chain disruptions – could still impact interest rates and consumer confidence. Policymakers and lenders alike must continue to balance financial stability with access and affordability.

At Lloyds Banking Group, we’re committed to supporting homeowners through the current transition in the market, whether by simplifying the remortgage journey, offering expert advice, or advocating for policies that promote fairness and flexibility. As we look to 2026 and beyond, our focus remains on helping customers navigate change with confidence and clarity.

Housing 

Andrew Asaam
About the author Andrew Asaam

Homes Director, Lloyds Banking Group

Andrew Asaam is a banking professional with over 25 years' experience working in financial services.

During this time he has covered a number of areas including M&A, multi-year change, credit risk and P&L ownership. Andrew is currently the Mortgages Director for Loyds Banking Group covering all brands and channels.

During his career he has held various leadership roles including Director of Mortgage and General Insurance at Virgin Money and as Credit Risk Director at TSB looking after all retail and business banking products.

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