They were asked a range of questions about where the market could be heading in 2025 and what to expect.
2024 has been an eventful year, with the Bank of England lowering interest rates for the first time since 2020 and some mortgage rates dipping below 4%, too.
What percentage will the Bank of England base rate be by the end of the year?
2024 saw the Bank of England drop the base rate from 5.25% to its current position of 4.75%.
The panel of experts were asked what they think the Bank of England base rate will be by the end of 2025. Unsurprisingly, there was a range of answers, given the uncertainty following the Autumn Budget and the return of Donald Trump to the White House in 2025.
Twelve experts predict interest rates will be in the 3-4% range by the end of next year, with the remaining nine predicting they will be in the 4-5% range.
This reflects the uncertainty surrounding the mortgage market going into the new year. The Office for Budget Responsibility (OBR) said it expects the Bank of England to drop the base rate to 3.5% by 2030 in its Economic and Fiscal Outlook published in October.
This is slower than many mortgage holders would like and is something to keep an eye on as the year unfolds. Given the instability in the Middle East and the potential impacts of tariffs by the incoming Trump administration, the base rate could rise in 2025, even if none of our experts think it will.
Will mortgage rates go up or down in 2025?
With large increases in taxation announced in the Autumn Budget, lenders increased their rates as a result. Will this trend continue in 2025, or will mortgage rates start to fall again?
Eighteen of the experts we polled predicted they will fall in the new year, with the remaining three stating they won’t.
Rates could fall as early as January if the Bank of England revises the base rates downwards at their next meeting. However, the market is volatile and uncertain as we wait to see the impacts of the Autumn Budget on the economy.
Many first-time buyers and those remortgaging in the new year will hope the majority of our experts are right in their assessment that rates will come down.
What will the average rate on a 2-year fixed deal be by the end of 2025?
Although most of the experts expect rates to fall in 2025, predictions about the average rate on a 2-year fixed deal by the end of 2025 were mixed.
There were two main camps here, with eleven believing they will be in the 3-4% range and ten predicting they will be in the 4-5% range.
Which prediction bears fruit will depend on the outcome of many of the points touched upon in previous sections. However, our expert’s mixed responses highlight the volatility inherent in the mortgage market at present and the uncertainty surrounding where rates will be in the coming year.
Will house prices increase in 2025?
There was almost complete agreement on this point, with nineteen of our twenty-one experts predicting house prices will increase in the new year.
Based on historical evidence, this is arguably one of the most surefire predictions in the housing market. House prices have tended to rise year on year, and it’s unlikely 2025 will be any different.
Will inflation increase in 2025?
This was another question on which the majority of our experts agreed. Sixteen think inflation will increase in the new year, with the remaining five predicting it won’t.
Most of our experts believe that the rate of inflation might rise slightly but will ultimately drop back to around 2%, which is the Bank of England’s target.
The primary concern is that Trump’s return and his threatened tariffs cause inflation to rise faster than expected, which might cause the Bank of England to raise interest rates.
Again, this highlights the current market uncertainty and volatility and indicates that external shocks can have a major impact on the UK.
Will the government introduce a new first-time buyer scheme in 2025?
Since the end of the Help to Buy scheme in 2023, many prospective first-time buyers have been hoping a similar scheme will be announced to help them get on the property ladder.
However, most of our experts think there won’t be a new first-time buyer scheme in 2025, with seventeen choosing this option. The remaining four think there will be one announced.
While the Labour government has committed to building 1.5 million homes by the end of the parliament in 2029, that doesn’t include a new scheme.
Our experts were unanimous in their verdict and feel the government’s priorities will be elsewhere in the new year. That said, there are still schemes first-time buyers can access to help them get on the property ladder, such as Deposit Unlock, the First Homes scheme and the Mortgage Guarantee Scheme.
Do you feel your business will have a better or worse year in 2025 than 2024?
Most of the experts we asked feel their business will have a better year in 2025 than in 2024.
Nineteen of our experts feel business will be better in 2025 than 2024, while two think business might suffer compared to 2024.
With the Bank of England expected to lower the base rate and 1.8 million fixed-rate deals estimated to end in 2025, the housing market could be very busy in 2025.
Aaron Forster, Director at Find The Right Mortgage, summed up the general sentiments with his thoughts on the question and the market as a whole:
"2025 will be a busy year for mortgages especially remortgages. It's set to have the largest volume of customers of fixed rate deal maturities. Also while inflation may start to rise slightly in 2025, with Trump in power and the cost of goods increasing, it's still likely we will see interest rates fall, albeit slower than what was originally predicted a couple of months ago. This will help stimulate the market and lead to a slight increase in property prices."
