How Lending Trends Are Reshaping the UK Housing Landscape: The Mortgage Market

As the UK housing market finds its footing in 2025, all eyes are on one critical factor: the mortgage market. With interest rates beginning to ease and nearly 1.8 million fixed-rate mortgage deals maturing this year, borrowing conditions are playing a defining role in both buyer behaviour and sales outcomes.

While national headlines often dwell on volatility, behind the scenes, we're seeing encouraging trends, including a meaningful reduction in fall-through rates, which have long been a source of inefficiency and frustration in the property journey.

Lending Conditions Are Evolving, and Buyer Behaviour Is Following

The Bank of England's decision to hold the base rate at 4.25% in June marked its second pause this year, with expectations of further cuts before the end of 2025. While this figure is still historically close to overall average, it's a sharp contrast to the peaks seen in 2023. Five-year fixed mortgage rates are now averaging around 4.55%, and lenders like Barclays and Nationwide have actively reduced rates and expanded product offerings — particularly in higher loan-to-value brackets.

This shift in mortgage pricing has had a direct impact on buyer sentiment. Nationwide reported the highest number of sales agreed since the summer of 2021, with May 2025 outperforming April by 25% and exceeding May 2024 levels by 6%. At the same time, affordability constraints remain. For those coming off low-rate fixed mortgages agreed in 2020, monthly repayments are set to rise by an average of £331 — creating friction for some homeowners and boosting competition among more price-sensitive buyers.

Despite this, buyer demand has remained remarkably resilient, especially in lower-value markets where house prices have continued to rise modestly. According to Zoopla, areas with average home values below £200,000 recorded 2.7% annual price growth, while higher-value areas (above £500,000) saw slight declines of -0.2%.

Crucially, housing supply is up. New listings in May hit their highest level since September 2020, and the total number of homes on the market is 24% higher than the six-year average. This has given buyers more choice, extending the average time to sell to 54 days (up from 48 a year ago), but has also resulted in a more stable, less speculative market — one that encourages commitment rather than caution.

Here in Harborne and Edgbaston, we’re seeing similar patterns play out: a rise in availability (or “stock” levels), steady buyer demand, and more price-aware behaviour on both sides. These well-established Birmingham markets continue to attract serious, financially prepared buyers — especially those taking advantage of improving mortgage offers.

Fall-Through Rates Decline — Why This Matters More Than You Might Think

One of the more unexpected bright spots in the property market during the first six months of 2025 has been the fall in fall-through rates (agreed sales transactions that don’t go on to complete) — a metric that often signals market volatility or buyer hesitancy. In contrast to previous years, transactions that went under offer in Q2 were more likely to complete, reflecting a shift in urgency and commitment from both buyers and sellers.

A key reason for this improvement was the stamp duty threshold change in April 2025. The government raised stamp duty rates across several bands — including an increase in the standard rate for properties over £250,000 and reduced reliefs for first-time buyers. As a result, many buyers rushed to complete purchases before the new rules came into effect, driving a spike in early spring activity and injecting a sense of urgency into the market.

This time-sensitive motivation meant that buyers were better prepared, mortgage applications were processed more quickly, and sales chains were managed more proactively. The result? More deals were executed cleanly, with fewer being abandoned midway.

While fall-throughs have always been a part of the property journey — and happen for a wide range of reasons — they remain an important measure of how the market is functioning. At McHugo Homes, we monitor this closely because it gives us a deeper understanding of current conditions, buyer and seller behaviour, and where additional support might be needed.

Just as importantly, it highlights the value of working with an agent who takes this seriously. By focusing on reducing fall-throughs with specific proven strategies, we aim to give our clients peace of mind — knowing that everything possible is being done to ensure a smooth, successful process from offer to completion.

Final Thoughts

While mortgage affordability remains a challenge for many, the broader housing market in H1 2025 has proven to be more stable and more transactional than many predicted. Increased stock levels, slightly easing rates, and a more realistic pricing environment have all contributed to a reduction in friction across the sales process.

Perhaps most importantly, the drop in fall-throughs signals that we’re no longer seeing buyers simply "testing" the market — they're committing. In a year defined by cautious optimism, that's a shift worth noting.

If you're considering a move in the second half of 2025 or even beyond, understanding where the market stands — and how lending conditions could impact your move — is essential. At McHugo Homes, we blend real-time market analysis with grounded local insight in Harborne, Edgbaston and surrounding areas to help you act decisively and confidently.

Talk to us today for a tailored consultation on your next move.