Post-pandemic property boom fuels remortgage market as five-year deals come to an end

A near 25% increase in mortgage activity in the first quarter of 2025 was driven by a 46% increase in remortgaging as “rafts of borrowers” continue to come off ultra-low pandemic era mortgage products, according to the latest Mortgage Market Briefing from Stonebridge. 

The brokerage network says the surge was due to large number of home owners coming to the end of five-year fixed deals taken out when the property market re-opened post-pandemic and effective interest rates on new mortgage borrowing fell to just 1.85%. March 2021 also saw the anticipated cliff edge, when SDLT was due to increase with huge demand for home moving services – although the government subsequently extended the deadline until June of that year in an effort to taper demand.

Between January and March 2025, mortgage applications increased by 24.6% year-on year in line with the Bank of England’s Credit Conditions Survey for Q4, which also predicted in January that remortgaging activity would increase in the first quarter, while secured lending activity for house purchase would fall.

Stonebridge’s report shows mortgage applications for purchases dipped 3.6% annually in Q1 and by 3.9% for first time buyers. Meanwhile, the share of variable rate mortgages climbed 0.8% from 4.7% to 5.5% year-on-year, with fixed rate deals remaining by far the most popular with 94.5% of the market.

Given the uncertainty of the market and fluctuating interest rates, two-year fixed rates have been increasing in popularity with their market share rising by a quarter, from 51.6% of all home loans to 65.2%. The share of five-year mortgage deals fell from 39.4% to 29%.

Against a backdrop of the Iran conflict and Bank of England interest rate rises, borrowing costs fell annually from an average of 4.74% to 4.31%. Loan-to-value percentages remained relatively stable, falling from 62% to 61% over 12 months.

Falling borrowing rates fuelled a 4% increase in total average loan amounts, in part due to house pricing. Remortgage saw a 7.3% in borrowing amounts and activity is expected to remain strong throughout the year, after UK Finance reported in December that 1.6 million fixed rate mortgages expired in 2025, with a further 1.8 million due to end this year.

Rob Clifford, chief executive at Stonebridge, said: “We know many borrowers locked into attractive five-year rates during the pandemic. Now that so many of those consumers are reaching the end of the deals they grabbed at that time, we are naturally seeing huge demand for advice on refinancing options.

“That will continue throughout this year, with plenty of lenders dynamically pricing both product transfers and remortgage deals to win market share.

“We’re likely to see a reversal in rate volatility in the second half of the year and the popularity of variable or tracker rates might increase. If the energy crisis is short lived, a variable product would allow borrowers to capitalise on a falling base rate once the conflict subsides but this is a time when impartial and expert mortgage advice is worth its weight in gold.”

Source: Stonebridge