What’s the outlook for the mortgage market this year? Kelly Bretherton, Head of Product at Iress, is cautiously optimistic.
After a stormy 2024, where we saw interest rates at their highest levels in over a decade and intense spells of high pressure for brokers, lenders and buyers alike, the outlook for the UK mortgage market is cautiously optimistic.
Three strong tailwinds are shaping my expectations:
- Falling mortgage rates
We’re all eager to see if base rate reductions made by the Bank of England in 2024 will continue into 2025 as inflation eases. Analysts predict four quarterly reductions in 2025, which could see rates falling as low as 2.75% (Goldman Sachs) or 3.75% (Santander). Either way, things are looking brighter, and we can expect more activity in the market.
- House price growth
As interest rates cool, house prices are expected to rise by 4% in 2025, according to Rightmove and Savills. While Zoopla predicts a slightly lower growth rate of 2.5%, we should see more movement in the market as homeowners get moving to take advantage of their property value increases and the lower rates.
- Increase in applications
The market will be hotting up as first-time buyers, home movers, and remortgagers all take advantage of the better conditions. With more applications and people needing help finding the right mortgage and protection, it’s good news for advisers who can make hay while the sun shines.
Snowed under
Could 2025 be the year we see mortgage advisers adopt new technologies to help them weather any storms and meet growing client demands and expectations?
There is much more to come to help ease the burden on lenders and advisers
Head of Product, Mortgages
We’ve seen significant advancements in recent years to help address longstanding pain points such as delays in paperwork, cumbersome approval processes, and lack of transparency. Connectivity tools that take the data from broker sourcing and CRM systems to Lender portals or APIs as part of the Decision In Principle (DIP) and Full Mortgage Application (FMA) process are a great example of this, and I’d love to see these take off in the next 12 months.
There is much more to come to help ease the burden on lenders and advisers, and I predict we’ll see more advances from AI in assisting (not replacing) brokers. The technology is there to drive greater efficiency, reduce application times and improve the overall mortgage experience for everyone, so why not embrace it?
Be prepared
Overall, 2025 looks set to be a year of recovery and stabilisation for the UK housing and mortgage market, with opportunities for buyers and homeowners to benefit from brighter conditions.
However, uncertainties in the global and domestic economy could lead to unsettled periods, so bring a brolly! Cautious planning will be essential, but with the right technology, brokers can deliver a clearer, calmer and more pleasant mortgage journey, come rain or shine.
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