September snapshot

  • The Bank has held the base rate at 4% for now, citing stubborn inflation.
  • Mortgage rates are meaningfully lower than a year ago, improving affordability for many buyers.
  • Official house price data shows modest ongoing growth, while asking price indices still show seasonal softness in places.
  • Mortgage approvals are rising again, suggesting healthy underlying demand.

Base rate steady at 4% while inflation remains stubborn

At the Bank of England’s latest meeting in September, they chose to hold the base rate at 4%, with a majority voting to keep it unchanged while two members preferred a 0.25% cut. The message from the Monetary Policy Committee (MPC) remains clear that further cuts will be data-dependent, given inflation is still persistently higher than the Bank’s target.

Headline CPI was 3.8%¹, unchanged from July, which is keeping the Bank cautious. Core measures of inflation are also persistent, so policymakers are rightly watching new data closely.

What this means for you

  • The Bank’s decision to hold the base rate should keep immediate borrowing costs stable for now, which will be welcome news for anyone nervous about higher monthly repayments.
  • But, because inflation is still above target, the prospect of future cuts is uncertain: lenders may not rush to push rates down aggressively until inflation shows firmer signs of trending towards 2%.

Mortgage rates are trending downwards

Average fixed mortgage rates have eased considerably from the highs of last year. Rightmove’s tracker shows the average two-year fixed rate around 4.5%, but there are also more competitive deals around for qualified borrowers. That’s a meaningful improvement in affordability compared with a year ago, although lender pricing still reflects caution about the inflation outlook and their own borrowing costs.

What this means for you

  • If you’re looking to buy soon, fixed deals are more attractive than they were a year ago – it’s worth shopping around and comparing the headline rates and deals, with the help of a broker.
  • If you’re on a variable or tracker mortgage, don’t assume big rate reductions will arrive straight away given the Bank’s latest commentary.

House prices: official data shows modest data

Looking at the different indicators gives the clearest picture:

  • The UK HPI (Land Registry, July 2025) – the most comprehensive and official measure – shows prices rose 0.3% month-on-month in July, with the average UK house price now around £270,000. Annual growth is resilient at 2.8%.²
  • Asking price indicators (Rightmove) continue to show seasonal softness, with sellers often repricing after the summer, but lower mortgage rates and active buyer demand are still propping up the market.³
  • Mortgage lenders (Nationwide) are reporting softer growth in their August figures, with house prices down 0.1% month-on-month and annual house price growth at 2.1%.⁴

What this means for you

  • Don’t read a seasonal dip in asking prices as a sign that the market is collapsing, as the headlines would have you believe. Completed sale data remains positive and buyer demand continues to support prices.
  • However, seasonal windows can create negotiation opportunities for buyers. If you’re well prepared (you’ve saved your deposit and have got a Mortgage in Principle), you may have more room to negotiate.

Mortgage approvals and activity dip slightly

Mortgage approvals for house purchases eased in August, with around 64,700 approvals compared with 65,350 in July.⁵ While this is a step down from the previous month, the figures remain broadly in line with the levels we’ve seen throughout much of the year – suggesting that buyer demand hasn’t disappeared, but has cooled slightly.

What this could mean for you

  • Fewer approvals mean there may be a little less competition for some properties. If you’re a well-prepared buyer with a deposit and a Mortgage in Principle, this could create opportunities for you to negotiate more strongly.

Policy rumblings: property tax talk continues

Speculation about changes to property taxes (including possible Stamp Duty reforms or regional tax changes) remains in the background as the government prepares for the Autumn Budget. Nothing is confirmed yet, but policy changes can influence market behaviour – especially among higher-value transactions – so it’s something to keep an eye on if you’re planning to move up the property ladder. See our previous explainer on the possible scenarios if you want a quick breakdown.

Our top tips

If you’re saving for a first home: keep building your deposit, check Lifetime ISA rules (remember the 25% government bonus and withdrawal rules), and get a Mortgage in Principle when you’re close. Being ready matters when market windows open. If you already have a mortgage, it could be a good time to review your deal and consider whether fixing makes sense for your circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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