As we leave behind a whirlwind 2024 in the housing and mortgage sector, 2025 is shaping up to bring its own set of changes, challenges, and opportunities. At Cleveden Park Wealth, we’re here to help you navigate the market with confidence and make informed decisions. Here's what lies ahead in the housing and mortgage landscape:
Mortgage Rates Gradually Declining
In 2024, mortgage rates fluctuated significantly, but recent months have seen steady declines. The average 2-year fixed-rate mortgage dropped from 5.93% to 5.62% by year’s end. For borrowers with strong credit and good deposits, 2025 could bring rates between 4% and 5%.
While drastic rate cuts aren’t expected, gradual reductions could encourage more competitive deals from lenders. If inflation returns to the Bank of England's 2% target, mortgage rates could fall further, making it a good time to lock in favourable rates.
Demand for Fixed-Rate Mortgages
Uncertainty around rates has driven many buyers toward fixed-rate mortgages to secure stability in monthly payments. With nearly 2 million fixed-rate deals expiring in 2025, we anticipate increased activity as borrowers seek new terms or explore remortgaging options.
Economic and Regulatory Influences
Impact of Inflation
Inflation is forecast to rise to 2.6% in 2025 but is expected to taper off by year-end. This trajectory could influence the pace of mortgage rate adjustments, affecting borrowing costs and housing affordability.
Stamp Duty Changes
April 2025 will see increases in Stamp Duty for many buyers, doubling the tax on average-priced homes. This could shift purchasing timelines, with a surge in activity early in the year as buyers rush to complete transactions before the changes take effect.
Is 2025 the Year to Buy or Sell?
The decision to buy or sell depends on individual circumstances. For buyers, falling mortgage rates and stabilising inflation create opportunities to enter or move up in the market. Sellers should watch for regional trends and buyer demand while considering the impact of higher borrowing costs on pricing.
Looking Ahead to 2026 and Beyond
By 2026, house price growth is expected to moderate to an average of 2.5%-3.5% annually. Long-term forecasts indicate a potential 23.4% increase in house prices by 2029, highlighting the importance of timing and informed decision-making.
How Cleveden Park Wealth Can Help
At Cleveden Park Wealth, we understand the complexities of the housing market. Whether you're looking to buy your first home, remortgage, or invest in property, our team provides tailored advice and solutions to help you achieve your goals.
Contact us today for expert guidance and start planning for a successful 2025 in the housing market. Together, we’ll navigate the changes and help you make the most of your opportunities.
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