What’s Coming in 2025: Our Mortgage Market Predictions

What’s Coming in 2025: Our Mortgage Market Predictions

As we start the year the mortgage market in Scotland, and across the UK, is showing promising signs of growth and stability. For buyers, homeowners and investors understanding the trends and predictions for the year ahead is vital for making informed decisions. Here’s what we may see in 2025.

Falling Mortgage Rates?

The year begins with good news for borrowers as major lenders like Halifax and Leeds Building Society have reduced their rates. Halifax now offers a two-year fixed deal starting at 4.49% with a 40% deposit, while Leeds Building Society’s five-year fixes begin at 4.25%. These reductions reflect a broader trend of falling mortgage rates as the Bank of England base rate stabilises.

Experts predict that if this trend continues, mortgage rates for two- and five-year fixed deals could settle around 4% in the coming months. This is a welcome relief for borrowers after the higher rates seen in recent years.

Mortgage Market Growth

The mortgage market is set to grow in 2025. The Intermediary Mortgage Lenders Association (IMLA) forecasts an increase in gross mortgage lending from £237.5 billion in 2024 to £275 billion in 2025 – a 16% jump. This growth reflects improving affordability and renewed buyer confidence.

UK Finance also anticipates a steady rise in mortgage approvals and home purchases, driven by more competitive rates and stabilising economic conditions.

A More Balanced Market?

In 2024, Scotland’s housing market outperformed the UK average, with house prices rising by 4.4% compared to the UK’s 3.6%.

The average house price in Scotland reached £187,016. However, 2025 is expected to bring a slowdown in price growth, with predictions of a modest 1.1% increase nationwide.

This more measured growth could provide opportunities for buyers who were previously priced out of the market, especially first-time buyers looking to step onto the property ladder.

Potential Policy Changes

Policy changes in 2025 could shape the mortgage landscape further. New government schemes for first-time buyers are being discussed, which may boost affordability and stimulate market activity.

Buyers should keep an eye on developments and be ready to take advantage of any potential incentives that become available.

What This Means

So far 2025 looks to possibly offer a more stable market. Mortgage rates are lowering and the smaller growth of house prices could provide an opportunity to access some competitive deals.

For those considering remortgaging, now could be an ideal time to explore options and see if you can secure a lower rate. Buyers looking to enter the market or move up the property ladder should explore their options and get themselves financially ready to take advantage of any lower rates or incentives that become available.

At ABC Mortgages, we’re here to guide you through the market and help you make the most of what is on offer this year. Whether you’re buying, remortgaging or simply exploring your options, we’re ready to provide expert advice tailored to your needs.

As always, I hope this helps! For more information on how ABC Mortgages can assist with your mortgage needs, feel free to contact us using the information below.

Thanks,
Bill Muir
ABC Mortgages

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