The conditions are right for there to be cheaper and more affordable mortgages in 2025
Remember when mortgage rates were this low? It was 3 months ago, not a headline in itself, but this time it might be time to take notice...
The UK mortgage market has seen a timely drop in the base rates this month, with High Street giant Santander recently offering rates as low as 3.99%. This is the first time rates have been at this level for some time, and it could be a watershed year for those looking for competitive mortgages.
Given the current conditions for the property and mortgage landscape, what does this mean for borrowers, and what should you expect in 2025?
The current mortgage landscape
Several banks have lowered their mortgage rates in recent weeks, driven by a combination of factors including economic conditions, Bank of England decisions, market competition and the race to beat a pending hike in tax when buying property. This has led to a significant drop in average mortgage rates across the board, the headline example being Santander. Where one major lender goes, others tend to follow.
What this means for Borrowers
This is good news for borrowers, as lower rates can lead to lower monthly payments and increased affordability. For first-time buyers, this could open up the market and make it easier to get on the property ladder. There is a limited time to buy with favourable tax treatment if you’re a first-time buyer – subject to the transaction completing in this financial year by 5th April.
Existing homeowners may also benefit from remortgaging to take advantage of the lower rates. This could save them a significant amount of money over the term of their mortgage. At worst, it will save the pain that some remortgagors have had to go through in the past 12 months, where fixed rates under 2% have expired and borrowers have had to opt for 5% plus!
Property investors could also see an impact from the lower rates, as this could make it more affordable to finance investment properties. This should go some way to slow down rent increases on those who are unable or unwilling to buy right now,
2025: A Potential Watershed?
While there is always uncertainty in the mortgage market, there are several reasons why 2025 could be a significant year for borrowers.
First, there is a potential for further rate decreases as the economy continues to struggle with weak growth, and the Bank of England use lower interest rates to kick-start this. Second, increased competition among lenders could lead to even lower rates. Third, the government may introduce new initiatives to support first-time buyers and other borrowers.
Finally, there is the attempt to build more homes and ensure home ownership remains a realistic aspiration for many.
Of course, it is important to remember that predictions are always uncertain. However, the current trends are certainly positive for borrowers, and 2025 could be a great year to secure a competitive mortgage.
What you should do next
If you are considering taking out a mortgage or remortgaging, it is important to speak to a qualified mortgage advisor who has market access, especially if you have complex income. They can help you understand your options and find the best deal for your individual circumstances.
Cleerly’s experienced mortgage consultants are committed to providing their clients with the best possible mortgage advice, comparing existing lender options alongside the market, to ensure the best deals are obtained.