Stonebridge welcomes rise in mortgage applications and ‘aggressive’ rate cut – Mortgage Strategy
Broker network Stonebridge said its mortgage application volumes rose 7% year-on-year in October, while competition from lenders forced the average interest rate to drop 21 basis points to 4.43%.
Stonebridge’s latest mortgage market briefing said the typical loan size fell to £195,068 in October, compared with £197,200 in October last year.
Stonebridge chief executive Rob Clifford said: “The fact that mortgage applications are up more than 7% year-on-year shows that the market is moving forward despite greater economic uncertainty and speculation around the Autumn Budget.
“One of the key reasons is that competition continues to be fierce among lenders. Many of the major high street brands have reduced their interest rates in recent weeks, meaning the average borrower is now saving around £300 a year compared to 12 months ago. It may seem like a small savings, but it all matters at a time when many people are still struggling to cope with rising costs of living.
“If we get another rate cut before the end of the year, as expected, this could provide further momentum as we move into 2026. Combined with the large number of fixed-rate loans coming due this year and next, we expect activity to strengthen further over the next 12 months.”
Nearly all customers (94.8%) had opted for a term mortgage in October 2025, the report said.
However, this is down from 97.1% a year ago.
Clifford said: “Fixed deals offer the security of predictable repayments, which is particularly attractive in uncertain times. However, an increasing number of borrowers appear to be willing to accept the risk of fluctuating payments, betting that interest rates will fall further as widely forecast.”
The most popular mortgage terms are two to three years, with 42.8% of customers choosing these terms, compared with 35.6% in October 2024.
The second most popular is the five-year term at 23.6%, followed by the one- to two-year term at 21.5%.
Clifford said the BoE’s “cautious approach has prevented many borrowers from opting for variable rate deals”.
He added: “Instead what we are seeing is a surge in demand for short-term fixed rates. These products offer the best of both worlds – protection from immediate interest rate fluctuations without being locked in for the long term. Many borrowers see this as a sensible middle ground, allowing them to benefit from potential future rate cuts while retaining a degree of certainty.
“But market sentiment has changed since August’s unexpectedly low inflation data. Markets are now pricing in another rate cut before the end of the year, rather than waiting until the spring. If this materializes, we may see more borrowers opting to lock in longer-term deals to secure attractive rates if the outlook changes again.”
Remortgages continue to dominate lending, accounting for 62.5% of business in October 2025, while home purchases accounted for 37.5%.
A year ago, remortgages accounted for 57.3% and purchases accounted for 42.7%.
“At first glance, the data might suggest a downturn in the home buying market, but that’s not the case,” Clifford said. “Home buying loans have exceeded last year’s levels almost every month so far this year. It’s just the sheer volume of loans maturing in 2025 that’s tilting the market toward refinancing.”
