5 Reasons for Mortgage Market Optimism in 2025

As 2024 draws to a close, I've seen firsthand how challenging this year has been in the mortgage and property market. However, as someone involved in the industry on a daily basis, I genuinely believe there are encouraging signs ahead for both existing homeowners and prospective buyers.

Let’s discuss my five reasons for optimism as we look toward 2025:

1. Interest Rates becoming more stable

The mortgage market has finally begun to settle after several years of volatility. With inflation now seemingly under control, there’s growing confidence that we’ve passed the peak of interest rates.

Many economic forecasts suggest potential rate reductions in 2025, which could bring:

·???????? More competitive fixed-rate mortgage deals.

• Better remortgage options for existing homeowners.
• Increased affordability for first-time buyers.

2. Enhanced First-Time Buyer Support

Lenders have made significant strides in addressing the challenges faced by first-time buyers. Notable initiatives include:

·???????? Enhanced affordability calculations from market leaders like Nationwide and Halifax, making it possible for more first-time buyers to afford their first home.

• Innovative low-deposit options, including: Skipton Building Society's Track Record (100%) Mortgage for those with strong rental payment history. Accord Mortgages' ￡5,000 deposit mortgage.

3. Growing Lender Appetite

Lenders are actively evolving their propositions, rules, and criteria to help more borrowers. These developments include:

• Expanded availability of joint borrower sole proprietor mortgages, which allow family members to assist.
• Improved later-life borrowing options, recognizing changing financial needs beyond traditional retirement age.
• "Common Sense Lending" – Some building societies are taking a human approach, considering the merits of an application rather than relying solely on automated decisions.
• Support for shared ownership (part-buy-part-rent) schemes.
• Flexible offset mortgage products.

4. Digital Transformation

The traditionally slow-to-adapt mortgage industry is now embracing technology, leading to:

• Faster application processing through automated valuations, open banking, and digital income validation.
• More precise affordability assessments.
• Streamlined documentation requirements.
• Enhanced customer service via sophisticated online portals.
• Greater transparency throughout the entire mortgage journey.

Unfortunately, the conveyancing (legal work) process still lags behind and could benefit from similar efficiency improvements. It may take until after 2025 to see significant progress, but a shorter timeline from application to completion remains a hopeful goal.

5. The Green Revolution

The green mortgage agenda is gaining momentum, with lenders offering meaningful incentives for energy-efficient properties:

• Preferential interest rates for energy-efficient homes.
• Cashback offers for properties with high EPC ratings (A or B).
• Additional borrowing options for green home improvements, such as heat pumps, solar panels, or insulation.
• Enhanced affordability calculations for energy-efficient properties due to their lower heating costs.

Looking Ahead with Confidence

While the property market will always carry some uncertainty, these developments give me genuine hope and optimism for 2025.

Staying informed, planning ahead, and getting support from professionals will help you achieve your goals in this evolving market.

Your Action Plan for 2025

To make the most of these opportunities, consider the following:

• Start your preparation early – It’s never too early to plan and important to understand all your options.
• Use a mortgage broker – They can help you create a tailored plan and support you every step of the way.
• Be cautious with advice – Well-meaning friends, family, and colleagues may offer their advice, but everyone’s circumstances are unique. What works for them may not work for you.

Remember, while market conditions matter, your personal circumstances should always guide your mortgage decisions.

Whether you’re buying your first home, remortgaging, or moving house, I believe 2025’s mortgage market offers genuine reasons for optimism.

Your home may be repossessed if you don't keep up with your mortgage payments.

This article doesn’t constitute advice - your situation and requirements are unique and therefore you should seek expert advice based on your own individual circumstances.

About Me

I'm Mark Humphrey, founder and Advisor at MHC Mortgage & Protection Ltd, a mortgage broker firm based in Whitstable and helping people buy their homes across the UK.

I've worked in Mortgages for over 20 years and am passionate about making the mortgage and moving process as simple and stress-free as possible.

Buying your home is a BIG DEAL and with a bit more understanding and help along the way - it really can be such a positive experience and not the stressful and anxious time that so many people dread!