MARKET INSIGHT
UK property market update for july 2025
August 05, 2025 • Author: George Radford
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In the wake of the UK government’s Autumn Budget, we’re fielding lots of questions from clients on UK interest rates and the current state of the mortgage market.
CEO
Donna Spencer
We spoke to Donna Spencer, CEO of specialist mortgage broker International Property Finance Group, and this is what she had to say.
“ The Bank of England has settled into a new phase, keeping its base rate steady at 4.25% since May, after a series of responsible cuts from last year’s highs. There’s a real sense that the worst turbulence could be behind us: inflation has now cooled to 3.6% in July, still above target, but moving consistently in the right direction despite stubborn food and transport prices.
For homeowners and would-be borrowers, the picture is looking a lot brighter than this time last year. Mortgage rates—whether you’re after a two- or five-year fix—have slipped back from their previous highs, now sitting in the 4.5%-5% range. That’s still higher than many would like, but the recent steadying of both variable and tracker rates has brought some overdue predictability to anyone planning their next move or budgeting for repayments. The SONIA benchmark, at 4.22%, is also calm and consistent, giving borrowers and investors some welcome peace of mind after months of volatility.
Elsewhere in the industry - The digital transformation in banking means more consumers use apps and AI tools to manage their money, but having a mortgage consultant who really understands how lenders work remains key. Rates are only part of the picture—each lender’s criteria, product features, and flexibility vary greatly. A consultant’s insight helps find the right deal for your unique situation, beyond just the headline rate.
Looking ahead, mortgage rates are expected to stay relatively steady in 2025, with some gradual decreases possible if inflation continues to fall. Analysts predict the Bank of England base rate could drop to around 3.75% by late 2025 and potentially to 3.5% or slightly lower in 2026. However, rates won’t plunge quickly; any improvements are likely to be slow and cautious, reflecting persistent inflationary pressures and economic uncertainties. So, while there is a hopeful path to lower rates, ongoing expert guidance remains valuable to navigate these shifts effectively.”
| Market Signal | Latest Data | Market Insight |
|---|---|---|
|
BoE Base Rate |
Cut to 4.75% |
Signals stabilisation after two years of steep hikes to control inflation. |
|
Inflation |
Jumped back to 2.3% in Oct 2024 |
Driven by energy costs, may limit further rate cuts and keep mortgage costs higher. |
|
Rate Forecast |
Possible drop to 4.5% by late 2024 |
Dependent on inflation trends; could ease borrowing costs into 2025. |
What the current UK mortgage market means for property investors
While mortgage rates remain higher than the historical lows seen in recent years, we’re seeing increased competition among lenders, creating opportunities to secure competitive deals—especially for buy-to-let investors. Buying investment property with RPA also means working with the International Property Finance Group who excel at sourcing tailored mortgage solutions for international investors granting our clients access to exclusive products often unavailable through traditional high-street lenders.
Donna Spencer, CEO of IPFG says, “When investing in UK property - particularly buy-to-let - it’s important to understand the concept of a "sweet spot." This is where the rental income comfortably covers your mortgage payments, and you’ve done your due diligence on key factors like the location, local demand, and occupancy rates. Essentially, your tenants are paying off the mortgage for you, creating a solid foundation for your investment.”
Conclusion
The UK property market remains a robust choice for international investors, primarily due to its unique characteristics. Housing supply continues to fall short of demand, and as an island nation with limited land for development, this imbalance persists. For investors, this means well-located properties in high-demand areas are likely to retain their value and deliver consistent rental yields over the long term. Investors should not be put off buying, for as the old adage goes, one has to speculate to accumulate and as our December market report shows, house prices are set to increase more sharply in 2025, giving investors the opportunity to widen those profit margins the sooner you buy.
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About the author
READ OUR PREVIOUS BLOG POST
Managing Director
GEORGE RADFORD
George is the co-founder of RPA Group and Managing Director of the business in the UK and Africa. A qualified chartered surveyor (MRICS) with almost 20 years of property investment experience, George has helped his clients successfully grow and strengthen residential property portfolios in multiple markets and territories.
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