19th October 2025 Mortgage and Protection News

Karl McCaffrey
Oct 19
2 min read

As of October 2025, the UK mortgage and protection markets are showing cautious stabilisation, alongside notable new product enhancements and regulatory-driven consumer initiatives.

Mortgage Market and Rate Trends

Moneyfacts reports that UK fixed mortgage rates have risen for the first time in eight months — the average two-year fixed rate edged up from 4.96% to 4.98%, and five-year deals increased from 5.00% to 5.02%. This marks a shift after prolonged declines, driven by volatility in swap markets and lender caution. According to Garrington’s October property review, the market is balanced but regionally split: lower-value properties (below £200,000) are still seeing up to 2.8% price growth, while higher-value homes are flat or falling. Lending activity remains steady, with borrowers adjusting to higher costs rather than retreating. Meanwhile, Bank of England data cited by Yahoo Finance shows lenders expect stable demand for house purchase loans but growing remortgage activity through Q4 2025.

Protection Insurance and Claims Insights

The Association of British Insurers (ABI) confirmed that a record £8 billion was paid out across life, critical illness, and income protection policies in 2024 — a 10% increase year-on-year.Critical illness payouts totalled £1.3 billion, with cancer representing 62% of all claims. Income protection benefits rose to £204 million, reflecting growing awareness of workplace income risks. Despite this, Drewberry found only 1 in 11 UK adults currently hold income protection — highlighting a major coverage gap for mortgage clients.

Critical Illness and Life Cover Product Developments

HSBC Life UK has expanded its critical illness proposition with several customer-focused enhancements. These include top-up payments (up to £200,000 or the sum assured) for nine severe conditions such as motor neurone disease and Parkinson’s, improved clarity in CI definitions, and earlier claim access for NHS surgery waiting lists. The CI Plus version also now includes £5,000 payments for seven pregnancy complications, developed in response to policyholder feedback.

Guardian has widened eligibility for life and critical illness cover to improve inclusivity, easing criteria around age, residency, and occupation types to reach more demographics. These moves follow a broader industry push toward fair value under the FCA’s Consumer Duty regulations.

Consumer and Regulatory Context

The Financial Conduct Authority continues to emphasise product “fair value” through the Consumer Duty guidelines, intensifying scrutiny across protection and health insurers. WeCovr’s 2025 private medical insurance market report highlights inflationary premium pressures but also innovation in “value-added” features like 24/7 digital GP access and robust mental health benefits. This trend complements consumer demand for more integrated health and protection propositions post-pandemic.

Key Takeaways for Mortgage Advisors

Fixed mortgage rates are rising slightly but remain moderate historically.
Buyer activity has stabilised, though regional divergence persists.
Protection claims hit record highs, underscoring consumer need amid ongoing underinsurance gaps.
Major insurers like HSBC Life and Guardian are expanding critical illness and life cover access and flexibility.
FCA Consumer Duty continues to drive improvements in policy transparency, inclusivity, and fair value in protection planning.

For advisors, this climate presents an opportunity to reinforce holistic conversations about financial resilience — aligning mortgage advice with income protection and critical illness strategies tailored to evolving consumer expectations.