July 2025 UK Mortgage Update: 95% Scheme Extended and Income Rules Eased
Hello from Pera Mortgages,
If you’ve been wondering what’s new in the mortgage world, you’re in the right place.
This July 2025 UK mortgage update breaks down the latest changes, from new government support to shifting rates, and what they might mean for your next move.
Whether you’re buying your first home, moving somewhere new or thinking about remortgaging, we’ve summed it up simply and clearly once again, just for you.
1. Mortgage Guarantee Scheme Made Permanent
The government has confirmed that the Mortgage Guarantee Scheme, originally set to end this year, will now continue indefinitely.
You can view the source of this information via the link: gov.uk 2025 Mortgage Guarantee Scheme
This means:
- You can still access mortgages with just a 5% deposit (up to 95% LTV)
- Applies to homes worth up to £600,000
- Open to both first-time buyers and home movers
While it offers an easier route onto the ladder, bear in mind that interest rates on 95% deals can be higher, and your borrowing options may vary by lender.
2. Lenders Relax Income Rules to Boost Affordability
As part of the government’s drive to increase homeownership, major lenders like Nationwide are adjusting their affordability criteria. From this month:
Borrowers can access 5x income mortgages with annual earnings of £30,000 (individual) or £50,000 (joint)
You can view the source of this information via the link: gov.uk Reeves to cut financial red tape to boost homeownership
These changes could benefit an extra 10,000 first-time buyers each year
This means more people may now qualify for the homes they’ve had their eye on, even if affordability previously held them back.
3. Interest Rate Cuts Expected Later This Year
After two earlier rate cuts in 2025, the Bank of England base rate currently sits at 4.25%. Economists are now predicting further cuts in August and November, possibly reaching 3.75% by year-end.
You can view the source of this information via the link: routers.com BoE to cut rates in August and November with steady economic growth anticipated- Reuters poll
Lenders are already adjusting:
- 2-year fixed rates are now available from around 3.84%
- 5-year fixes are starting from 3.95%
4. Surge in Remortgaging & Buyer Demand
More than 41,000 homeowners remortgaged in June, the highest number since 2022.
The reason? To avoid defaulting to Standard Variable Rates (SVRs), now averaging over 7.6%
Meanwhile:
- Demand from first-time buyers and home movers rose by 11%
- Agreed sales are up 8% year-on-year
- Annual house price growth has slowed to around 1%
These shifts, highlighted in this July 2025 mortgage update, suggest growing confidence in the market, especially among those looking to lock in better deals.
5. Rise of the 35-Year Mortgage
More buyers; particularly over the age of 35 are opting for 35–40 year terms to reduce monthly payments.
You can view the source of this information via the link: moneyweek.com More borrowers are taking marathon mortgages that will last into retirement – how risky are they?
While appealing at first glance, these “marathon mortgages” mean:
Higher total repayment costs over time
Risk of carrying mortgage debt into retirement
They may suit some, but they’re not one-size-fits-all, be sure to weigh the long term trade offs.
Our Advice Corner
Here’s how we’re guiding our clients this month:
Low deposit? The extended Guarantee Scheme may help, but we’ll help you compare rates and lenders.
Need to borrow more? New income thresholds might work in your favour. Let’s check your eligibility.
Current deal ending? Explore remortgaging options before falling onto your lender’s SVR.
Thinking long term? A longer mortgage may cut costs now, but we’ll walk you through the full picture.
Curious about what’s changed in the mortgage world this month?
Our July 2025 mortgage update brings everything together in one clear, down-to-earth round-up.
From government-backed support to shifting lending rules, we’ve highlighted what really matters and how it could affect your next step.
Got questions? Let’s talk. Your next mortgage decision deserves clarity, and that’s where we come in.
Your Mortgage. Your Future.
That’s our promise and it starts with the right advice, right now.