What does this mean for the mortgage market?
The UK economy recorded monthly growth of 0.3% in November 2025, outpacing expectations and reversing October’s decline, according to official data released by the Office for National Statistics (ONS).
Over the three months to November, the economy grew by 0.1% compared with the previous three-month period, after earlier data had suggested no growth.
The monthly performance was driven by a 0.3% rise in the services sector and a 1.1% increase in production output, while construction activity slipped by 1.3%. Earlier in the year, output had been held back by a cyber-attack on Jaguar Land Rover that disrupted vehicle production and weighed on manufacturing.
GDP grew 0.1% in the three months to November 2025.
— Office for National Statistics (ONS) (@ONS) January 15, 2026
Services (+0.2%) grew while production (-0.1%) and construction (-1.1%) both contracted.
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“Today’s figures provide some much-needed good news for the economy as it returned to growth in November, after showing no growth for the previous three months,” said Richard Pike, chief sales and marketing officer at financial services software provider Phoebus Software. “A 0.1% increase in GDP won’t set the world alight but at least the UK economy is moving in the right direction.”
The improvement comes against a backdrop of uncertainty surrounding chancellor Rachel Reeves’s latest tax-raising Budget, delivered in late November following months of speculation over possible revenue measures. Business groups had warned that shifting expectations around tax policy were dampening investment plans and consumer spending ahead of the statement.
Despite November’s stronger-than-expected reading, growth remains weak by historical standards. The Bank of England has signalled that it expects little or no expansion in gross domestic product (GDP) over the final quarter of 2025, even as it judges underlying growth to be running at around 0.2% per quarter. The latest data are unlikely to alter the broader picture of a sluggish economy but may give policymakers more confidence that activity is stabilising as they consider the timing and pace of further base rate cuts.
For the mortgage market, the figures add to a complex backdrop. Softer overall growth, subdued business investment and pockets of sectoral weakness, including construction, continue to raise questions about the durability of demand. At the same time, the prospect of additional rate reductions, supported by tentative improvements in output and forthcoming inflation and unemployment data, remains a key factor for pricing, product design and borrower sentiment.
“The bad news for the housing market is that construction output fell by 1.1% in November, with the lowest three-monthly reading since March 2023,” Pike said. “With housebuilding activity taking a sharp downturn at the end of last year, we have to hope that client confidence returns in 2026 so construction companies can start building again.”
Further data on prices and the labour market due in the coming days will help shape expectations for monetary policy through 2026, with lenders, intermediaries and borrowers all watching for signs of how long the current low-growth environment will persist and how quickly the cost of borrowing may adjust.
“Looking ahead, the Office of Budget Responsibility downgraded its growth forecast for the UK in its most recent outlook but still predicts modest growth of 1.5% over the next three years,” Pike said. “With rates coming down and affordability improving, we are optimistic the housing market could be a key driver for growth over the coming months.”
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