Expectations for mortgage rates and house prices in 2025

The general feeling is that UK homebuyers and homeowners are hoping for stability in 2025, which is understandable following a year of fluctuating mortgage rates. In 2024 two-year fixed rates were between 4.34% in January to 4.92% in July ending the year at 4.21%.* 

What will happen in 2025?

We are hoping that mortgage rates will ease this year, but how drastically depends on inflation trends, swap rates, and the Bank of England’s decisions in which way the base rate should go.

There are of course still challenges, especially for first time buyers who face affordability barriers, with an increase in rent and cost of living making it harder to save for a deposit. The upcoming changes to the stamp duty land tax means from April 2025 first time buyers will no longer be exempt on properties up to £425,000, as this is being dropped to £300,000 potentially adding thousands to the cost.

Housing

There is an expectation that house prices will be up and down in the year ahead with a possibility of an increase in homebuyers early on in the year as people try to complete deals before the stamp duty changes. Zoopla forecasts a 2.5% rise in property values.

What should I do?

At Mortgage Required, we still recommend getting onto the property ladder if it is affordable for you. It is important to remain proactive and secure a rate as soon as possible to protect you from the volatility of the market and review this rate regularly to take advantage of any reduction or changes in the perception of the market.

If you are a first time buyer or a homeowner nearing the end of your fixed term, we strongly encourage you to reach out to a whole of market broker who can help you find a competitive rate. Get in touch with the team today: 01628 507477.

*Rates shown are the best available rates at the time.