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A Cautious Start to the Year for the UK Housing Market
Philip Keith • 3 February 2025
Ltd Company Buy to Let Mortgage Advice in Bristol

As we settle into 2025, it's a good time to reflect on the past month and look ahead at what the mortgage market might hold. January is traditionally a quieter month for housing activity, and this year has been no exception, although we have seen some interesting trends emerge.

 

Market Overview:

The general sentiment in the market is one of cautious optimism. While the economic outlook remains uncertain, we've seen some positive signs, particularly regarding inflation. This has led to a slight easing of mortgage rates compared to the peaks of late 2024, although they still remain significantly higher than the historic lows we saw a few years ago.

 

Buyer Activity:

January typically sees a dip in buyer activity as people focus on the festive season. This year, we've observed a similar pattern, with a noticeable decrease in new enquiries compared to the final quarter of 2024. However, the buyers that are active seem to be more serious and committed. We are seeing fewer speculative offers and more realistic pricing from sellers, leading to a more balanced market in some areas.


  • First-time buyers: This segment remains a key driver of the market. Affordability continues to be a major hurdle, but the slight dip in rates and more realistic asking prices is offering a glimmer of hope. Government schemes, such as shared ownership and Help to Buy (where still available), are still proving popular.
  • Home movers: Many homeowners are taking a "wait and see" approach, carefully monitoring the economic climate before making a move. Those who are selling are often doing so out of necessity (e.g., downsizing, relocation) rather than driven by aspirations for a larger property.
  • Investors: The buy-to-let market is facing some challenges due to higher interest rates and increased regulatory scrutiny. This has led to a slight cooling in investor activity, with some landlords considering selling their portfolios.


Mortgage Trends:

  • Fixed-rate mortgages: These remain the most popular choice for borrowers seeking stability and certainty in their monthly payments. While 2-year and 5-year fixed rates are still prevalent, we are seeing increasing interest in longer-term fixes (10 years or more) as borrowers seek to protect themselves against future rate fluctuations.
  • Tracker mortgages: With the Bank of England base rate potentially nearing its peak, some borrowers are considering tracker mortgages, hoping to benefit from any future rate cuts. However, this option carries more risk and is generally recommended for those with a higher risk tolerance.
  • Affordability: Affordability remains a significant concern for many borrowers. Lenders are carefully assessing affordability criteria, taking into account rising living costs and potential future interest rate changes. It's crucial for prospective buyers to have a clear understanding of their budget and seek professional mortgage advice.


Looking Ahead:

While it's difficult to predict the future with absolute certainty, the general consensus is that the market will remain relatively stable in the coming months. We anticipate a gradual increase in activity as we move into the spring, traditionally a busier period for the housing market. The key factors that will influence the market include:


  • Inflation: Continued progress in bringing inflation under control will be crucial for boosting consumer confidence and supporting mortgage affordability.
  • Interest rates: The direction of the Bank of England base rate will have a significant impact on mortgage rates and buyer activity.
  • Economic growth: A stronger economic outlook will likely lead to increased buyer confidence and a more buoyant housing market.


Our Advice:

If you're considering buying or remortgaging in 2025, it's essential to seek professional mortgage advice. We can help you navigate the current market, assess your affordability, and find the best mortgage deal to suit your individual circumstances. Don't hesitate to get in touch for a free consultation.

 

Disclaimer: This article is for general information purposes only and does not constitute financial advice. Please consult with a qualified mortgage advisor for personalised advice.

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Navigating the Recent Base Rate Shift: What it Means for Your Mortgage

by Mellow Financial • 11 April 2025
This month, we're focusing on the recent Bank of England base rate reduction we saw in February, and how it's starting to ripple through the mortgage market. Understanding these changes is crucial for your financial planning, so let's break down the key impacts. The Base Rate and Its Influence As you know, the Bank of England's base rate acts as a benchmark for many interest rates, including mortgages. The February reduction, while perhaps not dramatic, signals a shift in the economic landscape and has begun to influence lending practices. Impacts of the February Base Rate Reduction Variable Rate Mortgages: Immediate Adjustments Those with tracker mortgages have already seen a likely reduction in their monthly repayments. The direct link to the base rate means these changes are felt quickly. Standard variable rate (SVR) mortgage holders are now seeing varied responses from lenders. Some have passed on the reduction, while others are taking a more cautious approach. It's essential to check your lender's policy. Fixed Rate Mortgages: A Gradual Shift Existing fixed-rate mortgage holders won't experience immediate changes. However, the February reduction has begun to influence new fixed-rate offerings. We're seeing some lenders introduce slightly more competitive fixed-rate deals, reflecting their anticipation of sustained lower interest rates. This is a developing trend, and we expect to see more movement in the coming months. New Mortgage Applications: Increased Affordability The base rate reduction, coupled with lender competition, is gradually making mortgages more affordable for new applicants. We're seeing modest improvements in interest rates, which can translate to significant savings over the life of a mortgage. It is important to remember that lenders are still using swap rates, and their own risk assessments when pricing mortgages. The base rate is a factor, but not the only one. Remortgaging: Opportunities Emerging If your current fixed-rate deal is nearing its end, now is an opportune time to explore remortgaging options. The recent base rate reduction has opened up more competitive deals, potentially allowing you to secure a lower monthly payment. What to Consider Lender Variations: As always, lenders are reacting differently. Some are passing on the full benefit of the base rate reduction, while others are taking a more measured approach. Economic Outlook: The Bank of England's decision reflects their assessment of the UK economy. It's crucial to stay informed about economic trends, as they can influence future interest rate decisions. Your Personal Circumstances: Your financial situation, credit score, and loan-to-value ratio remain critical factors in determining the mortgage rates you'll be offered. Our Advice Review Your Mortgage: If you're on a variable rate, monitor your monthly statements. If you're on a fixed rate, consider when your deal expires and start exploring remortgaging options. Seek Expert Advice: We're here to provide personalised guidance. Don't hesitate to contact us to discuss your specific situation and explore your options. Budgeting: Even small changes in interest rates can impact your monthly budget. Review your finances to ensure you're prepared for any potential fluctuations. We're committed to keeping you informed and helping you navigate the mortgage market. Stay tuned for further updates, and please don't hesitate to reach out if you have any questions.
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