Broker network Stonebridge says its mortgage applications rose by 7% year-on-year in October, while lender competition forced average rates down by 21bps to 4.43%.
Stonebridge’s latest Mortgage Market Briefing says the typical loan size in October fell to £195,068 compared to last October’s £197,200.
Stonebridge chief executive Rob Clifford said: “The fact that mortgage applications are up more than 7% year-on-year shows the market is still moving forward despite wider economic uncertainty and speculation around the Autumn Budget.
“One of the key reasons is that lenders continue to compete aggressively. Many of the major high street names have reduced rates in recent weeks, meaning the average borrower is now saving around £300 a year compared to 12 months ago. That may seem a small saving, but it all counts at a time where many people are still struggling with the rising cost of living.
“If we see another rate cut before the end of the year, as expected, that could provide even more momentum as we head into 2026. Combined with the large volume of fixed-rate loans due to mature this year and next, we expect activity to strengthen further over the coming 12 months.”
Almost all customers (94.8%) opted for fixed-term mortgages in October 2025, the report said.
However, that proportion is lower than one year previously, when it was 97.1%.
Clifford said: “Fixed deals offer the security of predictable repayments, which is particularly attractive at a time of uncertainty. However, a growing group of borrowers appear willing to accept the risk of fluctuating payments, betting that rates will fall further as widely forecast.”
The most popular mortgage terms were two to three year terms, with 42.8% of customers choosing these, compared to 35.6% in October 2024.
The second most popular was the five-year term, with a share of 23.6%, then one to two year terms at 21.5%.
Clifford said that the Bank of England has “maintained a cautious tone, which has discouraged many borrowers from opting for variable rate deals”.
He added: “What we have seen instead is a surge in demand for short-term fixed rates. These products offer the best of both worlds – protection from immediate rate volatility 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 reductions while retaining a degree of certainty.
“But since August’s unexpectedly low inflation reading, sentiment has shifted. Markets are now pricing in another rate cut before the end of the year, rather than waiting until spring. If that materialises, we could see more borrowers choosing to lock into longer-term deals to secure an attractive rate in case the outlook shifts again.”
Remortgages continue to dominate lending, making up 62.5% of business in October 2025, while 37.5% was for house purchases.
A year ago remortgages made up 57.3%, with purchases 42.7%.
Clifford said: “At first glance, the data might suggest that the purchase market is subdued, but that’s not the case. Purchase lending has exceeded last year’s levels in almost every month so far this year. It’s simply the sheer volume of loans maturing in 2025 that has tilted the market towards refinancing.”
