Outlook for mortgages 2025
What advice would you give borrowers now the Bank of England is only set to cut rates twice in 2025, rather than 4 times.
How will the stamp duty threshold change sentiment? Are buyers rushing to get deals done?
Copy article
6 responses from the Newspage communityCopy all
Copy all
Copy
There’s definitely pressure to complete before April, and many face a significant jump in their tax bill if they don’t. Borrowers have adapted to the new norm of rates, albeit reluctantly. So next year will be brighter, despite the number of base rate drops being slashed in half. That said, there is a huge amount of pressure on this Government to get inflation under control. If it keeps creeping northwards, it could be another tough year for everyone.
Copy
Any advice is dependent on personal circumstances and more importantly attitude to risk. Budgeting and financial planning should not just be reactive to what the Bank of England may or may not do, and instead should be an ongoing personal assessment prioritsing debt repayment and building emergency funds on a regular basis. No one can predict with any real confidence where interest rates will be in 2025, but you can ascertain now what you can afford based on todays interest rates, for the short and long term, and plan accordingly.
Copy
As always be ready to review your mortgage once you are about 6 months from expiry of your current rate. Whether you are best to stay with your current lender or to move elsewhere will depend on many factors, such as your current lender, how soon they allow you to secure a new deal, and whether there will be better options in the wider market available to you. This is where your mortgage broker is vital to engage with, and you will need to be ready to make a decision promptly as rates may move quickly.
Copy
My advice is simple: what are you waiting for? Delays cost money, so waiting for the promised land of milk, honey and lower rates is just a way of unwittingly spending more money than you need to. The obvious one is the looming stamp duty change at the end of March. Not only will you face a bill which some buyers currently don’t have, but you’ll also have the springtime flurry of housing activity driven with lenders new year targets. Just like next years water bills, house prices will rise further, the increments go almost unnoticed, until it becomes time to pay.
Copy
The economy and forecasts are all over the place largely assisted by Ravaging Reeves' budget. The markets don't like uncertainty which has played havoc on swap rates. People's personal finance is hurting as the figures show for insolvencies and those with diminishing credit profiles. The best thing borrowers and buyers can do is secure a mortgage at their earliest opportunity and any good broker will be reviewing the rates to change if something better is launched. The changes in Stamp Duty at the beginning of April will cause a cliff edge of transactions but people will still need to buy and sell so it will rapidly become the new 'norm'.
Copy
Well, with the Bank of England cutting rates at the speed of a snail trying to cross the M25, my advice to borrowers is: don’t wait for miracles. If you spot a good deal, grab it—before lenders realise ‘two cuts’ is the new ‘four.’ As for the stamp duty threshold, it’s like dangling a chocolate Hobnob in front of a crowd—buyers are rushing, but with that distinct British hesitancy, fearing it’ll crumble before they can take a bite. Sentiment is a cocktail of cautious optimism and mild panic. Buyers want in, but they’re navigating the uncertainty with care. My advice? Get a savvy broker, keep an eye on the market, and remember, the housing game is more a slow roast than a quick fry.