As of early 2025, the UK housing market is experiencing notable developments influenced by recent interest rate adjustments.
Interest Rate Changes:
The Bank of England has reduced the base rate from 4.75% to 4.5%, prompting lenders to offer more competitive mortgage rates. Santander, for instance, has introduced two- and five-year fixed-rate mortgages at 3.99% for borrowers with a 40% deposit. Similarly, Lloyds Bank has launched a five-year fixed remortgage deal at 3.98%.
Housing Market Outlook:
Analysts predict a modest increase in house prices for 2025. Hamptons forecasts a 3% rise across Britain, with expectations of 3.5% in 2026 and 2.5% in 2027 as affordability improves.
theguardian.com Savills anticipates a 4% growth in 2025, contingent on mortgage rates aligning with expectations.
Market Dynamics:
The recent interest rate cuts have spurred increased competition among lenders, leading to more attractive mortgage deals for buyers. However, the market remains sensitive to further interest rate changes and economic conditions. Potential buyers and sellers should stay informed about these factors when making decisions.
In summary, the reduction in interest rates is contributing to a cautiously optimistic outlook for the UK housing market in 2025, with expectations of modest price growth and improved affordability.
