Following a Q1 that ended with strong market momentum and rising broker confidence, the second quarter of 2025 saw a remortgage market balancing robust underlying demand with the realities of economic recalibration. From continued affordability challenges to shifting borrower behaviour, Q2 offered valuable insight into what borrowers want and how advisers can guide them through a fast-changing market.
At the beginning of Q2, the market was lifted by some encouraging lending figures. According to the FCA’s Mortgage Lenders and Administrators Return (MLAR), gross mortgage advances rose by 12.8% in Q1 2025 to £77.6 billion, the highest quarterly total since 2022 and 50.4% higher year-on-year. Much of this activity was driven by buyers completing ahead of the March stamp duty deadline.
Meanwhile, intermediary confidence remained strong. IMLA reported sentiment across the sector rebounding to near-record levels, with remortgaging and product transfers making up 27% of all residential business handled
April: Completions up, sentiment steady
Moving further into April, the monthly LMS remortgage snapshot showed a 24% increase in remortgage completions over the course of the month, although instructions dropped 12% and cancellation rates edged up by 3%, a sign that affordability pressures and lender criteria continued to affect borrower decisions. The average monthly payment increase stood at £290.36 per month for those who remortgages, while 42% of borrowers increased their loan size.
Product selection told its own story with half of all borrowers opting for five-year fixed deals, despite market speculation of potential rate cuts later in the year. This demonstrates a growing preference for financial certainty over second-guessing rate movements.
May: The reality of repayment hikes hits home
Barclays Property Insights report for May revealed that 29% of mortgage holders planned to remortgage in 2025, with 72% expecting their repayments to rise by an average of £331 a month on average, the equivalent of £3,972 per year. Unsurprisingly, this has sparked a more careful approach to product selection. While 35% of respondents said they were considering longer fixed rate deals, 25% said they might opt for a variable product to retain flexibility in case of further rate reductions, with 7% targeting a tracker mortgage.
Bank of England Money and Credit data for May supported this resurgence. Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, increased by 2,400 to 63,000 in May. This was the first increase since December 2024. Approvals for remortgaging (which only capture remortgaging with a different lender) also increased in May, by 6,200 to 41,500. This is the largest increase since February 2024 (6,600).
June: Remortgage activity softens amid summer slowdown
While the first half of the quarter held firm, June saw a notable dip in remortgage activity. Twenty7tec data revealed that remortgage searches fell nearly 10% month-on-month to 645,446, one of the sharpest declines of 2025. This is likely due to a mix of seasonal slowdown, rate volatility, and consumer hesitation.
Total mortgage search volumes dropped 7.78% compared to May, while first-time buyer and second-stepper activity also declined. However, market interest remained strong year-on-year, with June’s overall search volumes up 11.75% compared to June 2024.
In summary, Q2 proved that while the appetite for remortgaging remains high, borrowers are split between locking in long-term stability and maintaining flexibility in anticipation of future rate cuts. As a result, product choice and market education will be central to conversations throughout the second half of 2025. With a significant number of fixed rate mortgages still set to mature, and economic uncertainty likely to persist, clarity will be critical for borrowers navigating increasingly complex decisions, and advisers remain best placed to provide it.
