The home-buying market update: July 2025

Felicity Holloway, our Head of Mortgages, unpacks July’s housing and mortgage market for you.

Bank of England holds firm as inflation creeps up

The Bank of England’s Monetary Policy Committee (MPC) opted to keep the base rate at 4.25% at its latest meeting in June, following the 0.25% cut in early May. Crucially, the Bank of England uses interest rates as its primary tool to try and control inflation, influencing borrowing costs across the entire economy. In fact, before the latest inflation figures were published, markets had been increasingly anticipating a further rate cut at the next MPC meeting on 7th August. Governor Andrew Bailey himself had commented on 14th July that the Bank was “seeing some evidence that inflation is moving in the right direction, and the possibility of further rate cuts is on the horizon, but we remain data dependent.”

However, the latest inflation figures for June show an uptick. Headline inflation (Consumer Price Index – CPI) rose to 3.6% in June, up from 3.4% in May. Similarly, core inflation, which excludes volatile items like energy, also increased slightly to 3.6% in June, from 3.5% in May.¹ While these figures remain lower than their peak, both measures have moved further from the Bank’s 2% target.

What this means for you 🔍

• While the base rate held steady, the unexpected rise in inflation means the Bank of England is unlikely to rush into significant rate cuts soon. This affects the overall cost of borrowing.
• The Bank’s main goal is to get inflation back to 2%. When inflation rises, it puts more pressure on them to keep interest rates higher for longer to cool the economy.
• If you have a variable rate mortgage, this inflation data reinforces the message that you likely won’t be seeing significant drops in your mortgage repayments in the short term.

Government announces new homebuyer plans

In big news for prospective homeowners, Chancellor Rachel Reeves’ Mansion House speech on the 15th of July confirmed the government’s plan to make the Mortgage Guarantee Scheme permanent. This initiative aims to boost homeownership by encouraging more lenders to offer mortgages with deposits as low as 5%.2 The Chancellor also spoke of wider financial reforms designed to boost investment and deliver “better deals on mortgages” for working people. You can read our recap on the address here.

What this means for you 🔍

• The permanent Mortgage Guarantee Scheme specifically encourages lenders to offer 95% mortgages, potentially opening up options for thousands more buyers who might have struggled to save a larger deposit.
• Wider financial reforms aim to ease lending rules for banks, which could translate into more flexible mortgage products and a broader choice of deals for borrowers.
• Knowing this government support is a permanent fixture provides crucial certainty for aspiring homeowners and contributes to the sustained availability of higher loan-to-value mortgages.

House prices are in transition

For anyone navigating the housing market, understanding current house price trends is crucial. But getting a clear picture isn’t always simple. That’s because different reports track prices in their own way, whether by region or how far along a sale is. To help you gain the clearest insights, we keep a close eye on updates from the UK House Price Index (UK HPI), Rightmove, and lender-specific data like the Nationwide House Price Index. Here’s what their latest findings mean for you as a buyer:

• UK House Price Index (UK HPI): The latest available figures are for May 2025 and show the average UK home price at around £268,652. After a dip in April, the monthly change from April to May was a 1.1% increase, with annual growth at 3.9%.³
• Rightmove House Price Index: In July 2025, the average asking price saw a more significant monthly dip of 1.2% to £373,709, bringing annual growth down to just 0.1%. Rightmove noted this as an unusual drop for July and has halved its 2025 forecast. However, despite this, ‘sales agreed’ are up by 5% year-on-year, and buyer enquiries increased by 6%.⁴
• Nationwide House Price Index: The latest figures for June 2025 showed a 0.8% monthly decrease in house prices, bringing annual growth to 2.1% year-on-year.⁵

What this could mean for you 🔍

• The official UK HPI, though reliable for completed sales, reflects earlier activity. More current data from Rightmove and Nationwide suggest a recent softening in asking prices and transaction values.
• Slight dips in some price data suggest you might have more room to negotiate your offer as a buyer.
• Don’t mistake price adjustments for a quiet market, as many buyers are still actively securing homes.

Mortgage approvals continue to climb

If you’re getting ready to buy or shopping around for a mortgage, it can be helpful to understand how many mortgages are being approved each month. The latest Bank of England data indicates that UK mortgage approvals increased to 64,170 in June 2025, up from 63,030 in May.⁶ This continued rise signals that more buyers are confidently securing mortgages, leading to sustained activity in the market.

What this could mean for you 🔍

• The steady increase in mortgage approvals signals a healthy and active market with consistent demand.
• While competition for properties might see a slight uptick, it also means more transactions are successfully moving forward.
• It reinforces a positive outlook among borrowers, indicating a willingness to commit to significant property investments.

1 Source: Office of National Statistics (ONS) CPI Annual Rate of Inflation
2 Source: Mansion House 2025 Gov UK
3 GOV.UK Land Registry (UK House Price Index for May 2025)
4 Source: Rightmove House Price Index for July 2025
5 Source: Nationwide House Price Index for June 2025
6 Source: Trading Economics, UK Mortgage Approvals for June 2025