Mortgage Market Predictions for 2025
After a turbulent couple of years with mortgage rates, many people will be wondering what 2025 will bring for the mortgage market. This will especially be of interest if you are one of the 1.8 million people with a mortgage due to end this year*. Or one of the 1.15 million people predicted to complete on a house purchase this year**. With this in mind, Adam Nanson from Your Mortgage Expert has put together his Mortgage Market Predictions for 2025.
What is likely to happen with Mortgage Rates
It’s been a tricky task predicting what’s going to happen with mortgage rates of late. We think we know what is going to happen and then inflation doesn’t behave as expected or external factors influence the UK’s financial outlook.
Notwithstanding this, the outlook for the year is positive and all forecasters expect for Mortgage Rates to be lower by the end of the year. The Bank of England Governor – Andrew Bailey -indicated the UK could see four interest rate cuts in 2025. This would result in interest rates falling from 4.75% to 3.75%***. This is despite the recent rise in the cost of Gilts and Government borrowing.*******
Whilst it doesn’t automatically follow that mortgage rates will fall alongside interest rate cuts. We have seen many rate cuts this year from many lenders and most predict this will continue. But interest rates do tick up and down, so it’s best to lock in a low rate when you have access to it and continually review it (which we will do for you).
More Remortgages rather than Product Transfers
Over the past few years, Product Transfers have led the refinancing market. This is due to a number of factors, but it’s probable that the cost of living crisis has had a significant impact on home owners wanting to stick with their current lender rather than switch to a new one****.
If rates do start to fall in 2025 as predicted, this is likely to lead to more competition in the mortgage market where the lenders are fighting for your business. This would increase the incentive for home owners to switch lenders rather that stick with their current lender.
If you are one of the 1.8 million people whose mortgage is coming to an end this year, we would advise you to speak to a mortgage broker who can review the market for you. And help you decide whether a product transfer or a remortgage is more appropriate for you.
More First Time Buyers – especially at the start of the year
Stamp Duty thresholds are due to go down in April. This has led to a rush from buyers looking to beat the deadline*****.
This means that, for First Time Buyers in particular, there could be a greater incentive to complete on a purchase at the start of the year in an attempt to avoid paying more on stamp duty.
It could also be the case that – with more properties on the market and some landlords selling properties – that there could be more first time buyer friendly properties available. We have already found more buyers contacting us this year and we hope for this trend to continue.
2025 will be a Buyers Market
Most experts are predicting that 2025 will be a buyers market**.
Lots of people have been holding off from selling until rates go down and the cost of living crisis improves. As such, there is an expectation that more completions will happen in 2025 than in previous years.
With more people looking to move, there is likely to be a wider choice of homes for sale. Which could lead to a longer average time taken to sell. This will mean that sellers will need to price their properties competitively in a buyers market.
Added to this, the effects of increasing stamp duty could impact sales for the rest of the year too. Buyers may well negotiate more fiercely to keep properties below the £300,000 price point in order to lower stamp duty costs.
Still a rocky road for Buy to Let
It’s been a tricky few years for the Buy to Let market with mortgage rates rising and the Renters’ Reform Bill coming in.
Most predictions are therefore for the Buy to Let market to remain static to 2025******. This comes despite higher stamp duty for second properties.
The market will most likely be supported by increasing rental yields with both Zoopla and RightMove predicting that rental yields will increase both in and outside of London.
More people will use a mortgage broker in 2025
In 2024, 87% of people using a broker for their mortgage and this is expected to rise to 89% in 2025.
If you want to be like the other 87% now using a mortgage broker, why not get in touch?
Searching the market yourself can be time-consuming. But with our help, we can compare thousands of mortgages, including exclusive deals and lenders that you wouldn’t otherwise have access to. We have regular contact with a wide range of lenders, some of whom you may not even know exist! With our help, you won’t have to search or contact each individual lender in order to compare the mortgage terms and rates; we’ll do all that for you.
If after reading our Mortgage Market Predictions for 2025 you are interested in having a no obligation chat about your mortgage, why not get in touch? We don’t charge anything up front, so by speaking to us, you are under no obligation. We are based in Salisbury, Wiltshire, but we can help you no matter where you live in the UK.
Simply call us on 01722 322683 or complete a contact us form on our website and tell us when it would be best to get back in touch with you.
*Source: https://www.financialreporter.co.uk/blogs/will-2025-be-the-year-of-the-remortgage.html
**Source : https://www.rightmove.co.uk/news/articles/property-news/housing-market-forecast-2025
***Source : https://hoa.org.uk/advice/guides-for-homeowners/for-owners/mortgage-rate-forecast/
****Source : https://www.financialreporter.co.uk/blogs/will-2025-be-the-year-of-the-remortgage.html
*****Source : https://www.rightmove.co.uk/news/articles/property-news/first-time-buyers-stamp-duty-deadline/
******Source : https://www.nrla.org.uk/news/buy-to-let-mortgage-market-predictions-2025