Should I buy or rent in 2025?

Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.

Is 2025 a good time to buy?

No-one can be sure which direction the housing market will go in. However, there are trends that are worth considering. House prices are expected to increase in 2025 at an estimated range from 2.5% to 4%. The changes in stamp duty from April 2025 are something to factor into your costs.

Mortgage rates

The mortgage rate you are offered is a huge factor in working out your costs in purchasing a home, so calculating this will help you figure out whether it’s affordable for you. Predictions for mortgage rates are that they are likely to stay at their current levels for a period and then reduce very gradually over the next couple of years. This depends on factors including world events, swap rates, and inflation. 

Rental costs

Despite rental growth slowing, rent costs are unlikely to decrease in 2025. With the Renters’ Right Bill becoming law this year, landlords could decide to increase rent to cover their additional costs. It’s worth noting that landlords are only allowed to increase the rent once a year, and the bill should allow tenants to challenge any unreasonable increases.

Mortgage vs Rent

Although mortgage rates are higher than they have been in the last 10 years, they are still relatively low. It is worth comparing mortgage payments to rental costs. Having a mortgage and making monthly payments reduces your loan amount and also builds up your property equity. Fixing your rate for say two or five years can provide comfort in that you will pay a specific amount for that duration, without any increases, unlike rent which could increase 5-10% annually.

Everyone’s situation is different, you need to work out whether buying a home is manageable for you. Below are some tips to help you decide whether you are ready to step onto the property ladder:

• Deposit: the more you can save for a deposit, the lower the interest rate you will be offered. 100% mortgages are available to some tenants
• Budget: calculate how much calculate how much you can afford – not just the price of the house, but monthly payments and all other costs. You want to feel comfortable, and not not be struggling to make ends meet!
• Spending: when you apply for a mortgage, you will be required to share 3-6 months of bank statements to see if you can afford the mortgage repayments. Because of this, it's good to be mindful of your spending in the months leading up to application.
• Credit score: having a good credit score can help your chances of being accepted for a mortgage. For advice on improving your credit score click here.
• Speak to a broker: there are so many options available, including schemes to help you buy your home. Speaking with an independent mortgage broker who can help you find the right option for you, and help you through the process.