Lending Market 2025 and Beyond
The Mortgages Journey in 2025
What Can We Expect?
The mortgage world of 2023 & 2024 was an interesting place to say the least. Towards the end of each quarter over the last 24 months we have seen a steadying economy.
So, will that continue and what does 2025 have in store for us?
Another Year Another Change?
The mortgage and property markets have been very changeable in 2024, but that this was not unusual in itself.
They have, historically speaking, always been prone to ups and downs. Even the big bogeyman of interest rate rises is not uncommon, and we are not even close to some previous highs.
The bottom line is that there is always a lot going on in the mortgage world and always another twist and turn waiting. The best advice is to get informed advice. Talking to us about your options is like using your satnav to get to an unfamiliar place. We are here to be your guide through the journey to a mortgage.
Then, when the next junction comes along, we will do everything we can to make sure you go down the right road.That said, as we always say in a speculative article such as this one, this is not about us, it is about you. In a short article like this we can discuss things, throw out some food for thought, and make predictions in a general way, but we can only advise properly when we know your personal circumstances.
Whatever comes in 2025, you need to make decisions that work for you.
Property Prices
There has been a lot of chatter about house prices falling and even some dire warnings of stagnant markets and negative equity problems. These warnings started months ago but clearly, we didn’t see them happen. It seems like the house price Armageddon has not only not occurred, but it also really didn’t even come close to happening in the overall market. It seems unlikely that it will happen in 2025 either. According to Rightmove amongst others, we can expect a 1% average drop in pricing next year. Other predictions vary up to 3%. This is all speculation of course but the common factor is that the market price change will probably be down, but not a be an actual crash. The buying landscape will still be a big factor in what houses are selling well of course. Desirable properties and market trends (for example the move to work from home boosting sales or rural properties) are likely to create spot rises for example. For the more flexible buyer though, you could well find yourself needing a lower mortgage next year or getting more house than you expected for your money. Whatever your reasons for moving though, the first sensible step is to speak to us about your options. See the next point for why.
Lenders And Deals Will Probably Be More Flexible
One of the more interesting things that came out of the ups and downs of last year was the way the mortgage lenders reacted to the changes.
When you get right down to it, the job of the mortgage lenders is, to state the obvious, to lend money to people who want to buy houses. When the market is ticking along, as it has been for several years, there is less incentive to bring in new products and opportunities.
One positive thing to come out of the fallout from covid, the difficult economy, the recent base rate changes, rising inflation and so on, was that the mortgage lenders started to adapt to the market.
There was a plethora of changes in both how suitability was measured and the deals available. We see no reason for this to change. During 2025 we can expect to see a very responsive and dynamic lending market.
That can only be good for everyone because if it does continue to adapt, it will create more consumer choice. The lenders want to lend, people want new properties and, if you have us on your side filtering the right deals for you, that should be good news if you are looking to mortgage.
What About The Interest Rates?
This is the elephant in the room. Let’s break this down and see what major factors are in play at the moment and what that is likely to mean for 2025. At the point of writing, the Bank of England base rate is 5.00% which is around 0.25% lower than the turn of last year but this is not unusually high in a historical context. In 2007 it was 5.75 and in 1998 it spent several months at over 7%.
It is reasonable to say that the last few years have been unusually low rather than the base rate being currently high. Inflation, which helped drive the recent rises, has slowed but the economy is still recovering. However, the urgent rises to combat inflation seems to have stopped.
Benchmarks vary, but the overall situation seems more settled than in the early part of last year which again suggests the rates will not be jumping in either direction in the short term. So, what all that seems to be pointing to is an extended period of a settled rate of interest. As always, there is no guarantees because the base rate is subject to a lot of factors, but many sources are forecasting that something in the region of the current base rate will be likely for quite a while. In short, a big drop does not seem to be likely for some time, but neither does a sudden increase. Overall, with a settled rate, static or lower house prices and inflation dropping, it is very likely there will be an increase in people looking to buy property. That means more need for mortgages and innovative deals from lenders who will be competing for the new business. Assuming things go as expected, and we see a more settled market, potential buyers would be well advised to look at their options.
