Remortgages accounting for 60% of activity as rates continue to fall

Mortgage applications jumped 9.2% year-on-year in July, confirming sustained market momentum as borrowing costs fall, according to Stonebridge's latest Mortgage Market Briefing.

The average mortgage rate dropped to 4.44%, down 62 basis points from a year earlier, saving typical borrowers around £890 a year.

Remortgages made up nearly 60% of activity in July, driven by fixed rate maturities and a desire to secure better deals. 1.8 million fixed rate deals are set to mature this year, driving a surge in remortgage activity as borrowers look to secure competitive deals or adjust their borrowing to fit changing circumstances. 

Conversely, purchase loans made up just 40.6% of activity, down from 50% a year ago. 

Two-thirds of those who fixed in July chose deals lasting three years or less – up from just under 61% a year ago. 

The latest data shows that despite the affordability pressures of the past two years, there’s been no meaningful shift towards interest-only borrowing, while fixed rates still make up 96% of new lending.

Rob Clifford, chief executive of Stonebridge, commented: “After a bruising couple of years, the mortgage market is starting to find its feet again, with falling rates boosting activity and giving a much-needed confidence boost to borrowers. 

“Applications jumped 9.2% in July compared with a year ago, proof that cheaper borrowing is starting to grease the wheels of the market. The average rate on new loans has dropped to 4.44% – 62 basis points lower than last July. While mortgage rates remain much higher than they were a few years ago, the fall over the past 12 months has been meaningful. On a typical 25-year term, that’s worth around £890 a year back in borrowers’ pockets. 

“With the potential for two further rate cuts this year, the market should continue its recovery in the second half of 2025. We’re not back to the boom times, but compared with where we were 12 months ago, this is a much healthier market.”