The UK mortgage market is set for a significant boost in 2025, with approvals projected to increase by 13.4%, according to research by award-winning mortgage adviser Alexander Hall. This positive outlook is driven by improving market sentiment, economic stability, and greater mortgage affordability, marking a continued recovery from previous downturns.
Landlords set to benefit from rising approvals
Alexander Hall analysed Bank of England data covering mortgage approvals over the past two decades, using historical trends to forecast the market’s performance for 2025. Their findings indicate that 2024 was a far more stable year for the UK property market, particularly in terms of buyer activity.
In 2024, 754,983 mortgages were approved for potential buyers, reflecting a 30.8% increase on 2023, when approvals had dropped to 577,173—the lowest annual total since 2010. This resurgence positioned 2024 as the strongest year since 2021, when the property market boomed due to the government’s stamp duty holiday.
Despite an anticipated return to previous stamp duty thresholds in 2025, Alexander Hall predicts further growth in the mortgage sector, estimating 856,346 mortgage approvals over the year—a 13.4% rise compared to 2024.
Economic stability fuels positive outlook
Stephanie Daley, Director of Partnerships at Alexander Hall, welcomed the findings but acknowledged that 2024 did not meet all expectations. “2024 was a far better year in terms of mortgage market activity, and we saw approvals climb considerably compared to 2023,” she said.
“However, there was a slight air of disappointment as we only saw two base rate reductions, which did not bring the level of mortgage affordability improvement many had hoped for.”
Daley remains optimistic about 2025, highlighting early signs of a stronger year ahead. “The good news is that 2025 is set to be even stronger for the sector. We have already seen a welcome boost with an early base rate reduction, and unlike last year, lenders are preemptively lowering rates in anticipation of improving market conditions.”
What does this mean for the buy-to-let sector
The rise in mortgage approvals is expected to have a positive impact on the buy-to-let sector, as more competitive mortgage rates could encourage landlords to expand their portfolios. With the rental market remaining strong and demand for housing continuing to outstrip supply, this presents an opportunity for landlords looking to secure new properties.
While policy changes such as increased stamp duty thresholds may create challenges, the overall market trajectory remains promising. If lenders continue to offer favourable rates and economic stability holds firm, landlords may find 2025 an opportune time to invest.
