We have seen a very busy start to 2025 with the number of purchase transactions up considerably compared to the same period in 2023 & 2024. This seems to be the same across many of the UK regions. Part of this may be due to the end of the current stamp duty holiday on 31st March 2025, although it seems likely to continue for the remainder to the year.
Fixed mortgage rates have been relatively steady since the start of the year, however, there have been reductions over the past 3-4 weeks with several lenders bringing out sub 4% products for the first time since Autumn 2024. Many economists are expecting fixed mortgage rates to continue to reduce, albeit slowly, for the remainder of 2025 however, there are numerous worldwide factors that can impact how this will develop.
The Bank of England made further cuts to the base rate at their last meeting on 6th February, with the rate currently at 4.5%. This was the third reduction since August 2024. Although the Bank of England base rate does not directly impact the pricing of fixed rates, any reduction is good for the market and should mean fixed rates remain low in the medium / long term.
With the base rate decreasing, anyone on a tracker product should have seen their mortgage rates reduce immediately. Further to this, most lenders have adjusted their standard variable rates in line with the base rate reduction which should also mean anyone on a discount variable mortgage product should see their rates reduce; though with this type of product there is no guarantee the lender will have passed on this reduction.
Looking Ahead
2025 is also expected to be very busy time for remortgages, with an expected 1.8 million products coming to an end this year. If you are one of the 1.8m you will be in the diary and we will be in touch. If you need to speak to us sooner, feel free to give us a call
The next Bank of England Monetary Policy committee meeting is on 20th March but currently the markets are not expecting any changes to the base rate, with most experts suggesting a further reduction at the next meeting in May.
The February inflation figure is due to be announced on the 26th of March, and with the January figure reaching 3%, any further increase could have an impact on future decisions on changes to the base rate made by the Bank of England.