October 2025 Mortgage & Protection Update: What’s Actually Happening (and What It Means for You)

The mortgage market has been through a lot of change over the last few years. After months of movement, October has brought something we haven’t seen in a while - a sense of calm.

Below we break down what’s really happening with mortgage rates, the wider UK economy, and the growing trend of long-term fixed-rate mortgages. Plus, in our Protection Corner, we look at why critical illness cover remains one of the most valuable (and misunderstood) parts of your financial plan.

TL;DR - Quick Summary

• Mortgage rates: Largely stable in October — average two- and five-year fixed rates sit around 4.98% and 5.02%.

• SONIA swap rates: Down by 0.2%, hinting that lender funding costs are easing.

• Inflation: Still stuck at 3.8%.

• BoE base rate steady at 4.0% with no immediate cuts expected.

• Long-term fixes: New lenders (like Perenna and April Mortgages) now offer 20–40 year fixed deals for long-term stability.

• First-time buyers: Innovative products from Skipton and Nationwide make getting on the ladder more achievable.

• Protection Corner: Critical illness cover remains vital - offering a tax-free lump sum if life takes an unexpected turn.

👉 Bottom line: The market feels steadier, but it’s still smart to plan ahead - fix early, review protection, and build flexibility into your financial plan.

Mortgage Market Snapshot - October 2025

The good news is that the mortgage market has remained relatively stable over the past month.

According to Moneyfacts, the average two- and five-year fixed rates have both increased very slightly - up by just 0.02% to 4.98% and 5.02% respectively. Given the volatility we’ve seen in recent years, that’s a minimal change.

Behind the scenes, lenders base their rates on the Sterling Overnight Index Average (SONIA) rather than directly on the Bank of England’s base rate. SONIA has actually fallen by around 0.2% this month for both two- and five-year money, suggesting some easing in funding costs.

We are still seeing high street lenders gradually trimming rates across certain product ranges. However, trying to “time the market” rarely works. Rates could move again tomorrow - and lenders often price in changes before we see them in the news.

Compare mortgage options

UK Economic Update - October in Brief

• Inflation: Stuck at 3.8% for the third consecutive month (September data). It’s encouraging that it hasn’t increased further, but still frustrating that it’s not falling towards the 2% target.

• Bank of England Base Rate: Remains at 4.0%, with the next decision due on 6 November. Current market expectations suggest the first rate cut may not come until early next year.

• Autumn Budget: Due to be delivered by the Chancellor on 26 November. There’s speculation about potential changes to stamp duty and other housing-related incentives, but we won’t know for certain until the announcement. We’ll share a full breakdown of any changes that affect homeowners and investors once the Budget has been delivered.

First Time buyers and Home Movers

Long-Term Fixed-Rate Mortgages: A Growing Option

One of the most interesting developments in recent months is the rise of long-term fixed-rate mortgages - with new lenders such as Perenna and April Mortgages offering deals that let borrowers fix their rate for 20, 30 or even 40 years.

This level of certainty can make budgeting much easier, particularly for families, first-time buyers, or anyone on a fixed income. By locking in your monthly payments, you protect yourself against future interest-rate rises - and some lenders even allow greater borrowing potential because the affordability picture is clearer.

However, there are a few considerations:

• The initial rate can be slightly higher than shorter term fixes.

• Early repayment charges (ERCs) may apply if you move or repay early.

• You’ll want to check whether your mortgage can be ported if you move home.

That said, most lenders now offer flexible options to transfer or repay early under fair conditions. If you’re planning to stay in your property for several years, a long-term fix could be a smart way to bring long-term stability into your financial plan.

Smart Options for First-Time Buyers

The market has also seen innovative products designed to help more people take their first step onto the ladder:

• Skipton’s “Track Record” Mortgage uses a history of regular private rent payments to help prove affordability - ideal for long-term renters.

• Nationwide’s “Helping Hands” product increases the lending potential for eligible first-time buyers, allowing them to borrow a little more under specific criteria.

It’s encouraging to see lenders designing products that reflect the real lives of modern buyers. Find out more in our First Time Buyer Guide.

Protection Corner - The Importance of Critical Illness Cover

When thinking about financial security, most of us focus on income, savings and mortgages. But what would happen if you were diagnosed with a serious illness and couldn’t work?

That’s where critical illness cover comes in. It pays out a tax-free lump sum if you’re diagnosed with one of a list of serious medical conditions - such as certain cancers, heart attack, or stroke.

That payment can be used however you need: to maintain your lifestyle, cover household bills, pay off your mortgage, or fund treatment while you focus on recovery.

Modern policies are far more flexible than they used to be. Many now offer:

• Partial payouts for less severe conditions

• Cover for children

• Optional extras such as enhanced cancer support or second medical opinions

And it’s not just for people with dependants. Anyone with financial commitments can benefit from having this layer of protection. Because it pays out on diagnosis - not death - it’s a practical safety net for real life.

Final Thoughts

Markets move, products evolve, and new opportunities emerge - but the foundations of good planning never change.
Secure the right mortgage for your situation, protect what matters most, and keep reviewing your plan as life changes.

If you’d like to understand how the current market impacts your plans - or explore whether a long-term fixed mortgage could make sense for you - we’d be happy to help.

Further Reading & References

If you found this update useful, you might also enjoy:

🔹 From Turkington Davis

• The First-Time Buyer Guide
  A step-by-step guide to navigating your first purchase with confidence.

• The Home Mover’s Mortgage Guide
  Understand your options when upsizing, downsizing, or relocating.

• How to Protect Your Family’s Financial Future
  An introduction to life and critical illness cover, explained in plain English.

🔹 Authoritative External Sources

(We only link to trusted, non-commercial sources to keep our readers informed.)

• Moneyfacts Mortgage Trends — monthly analysis of UK mortgage rate movements.

• Bank of England – SONIA Benchmark — official explanation of the Sterling Overnight Index Average.

• Office for National Statistics – Inflation and Price Indices — the latest UK inflation data.

• MoneyHelper – What is Critical Illness Cover? — impartial guidance from the UK’s MoneyHelper service.

Whether you’re planning ahead or just want a quick chat, get in touch today.

Independent, FCA-authorised financial and mortgage advisors | Trusted by Home Buyers across the UK

Your home may be repossessed if you do not keep up repayments on your mortgage.