Mortgage Rates Set to Fall Below 4% in Early 2025 – A Boost for Buyers and Sellers

Exciting news for anyone looking to buy or sell a property: mortgage rates are expected to fall below 4% early in 2025, marking a significant improvement for the housing market. After a challenging period of higher rates, experts are predicting that five-year fixed mortgage deals could dip below the 4% mark as early as February, with two-year fixed rates following closely behind later in the year.

What’s Behind the Change?

The Bank of England recently cut the base rate by 0.25% in November, bringing cautious optimism for the economy. Although the base rate is expected to hold at 4.75% in the short term, mortgage lenders are already looking ahead. Banks and financial institutions are keen to start 2025 on a positive note by offering more competitive mortgage products, meaning better deals for borrowers.

Swap rates (which influence fixed mortgage deals) are also softening, further fuelling predictions of sub-4% rates becoming widely available next year. If inflation continues to remain stable and economic conditions improve, lenders are expected to act swiftly to attract new borrowers.

What Does This Mean for You?

For Buyers:

• Lower mortgage rates will reduce monthly repayments, making homes more affordable.
• Improved affordability means you might be able to borrow more or buy a larger property without overstretching your budget.
• First-time buyers can particularly benefit, as lower rates reduce the cost of getting onto the property ladder.

For Sellers:

• Falling mortgage rates will increase buyer confidence, encouraging more people to enter the market.
• Higher demand for properties will improve the chances of securing a sale and could stabilise property prices after a challenging year.
• If you’ve been waiting for the “right time” to sell, this shift in the market could make early 2025 the ideal moment to list your property.

Why Is This Important?

The last time average mortgage rates fell below 4% was mid-2022, following years of low rates. Since then, rising interest rates have put significant financial pressure on households, slowing the housing market and limiting affordability. The anticipated decline in 2025 signals a return to stability for both buyers and sellers, helping the market to move forward.

Nick Mendes from John Charcol Mortgage Brokers highlights that five-year fixed rates for those with a strong deposit (60% loan-to-value) are expected to be the first to fall, followed by deals requiring smaller deposits. Two-year fixed rates will also improve but may take slightly longer to reach the sub-4% threshold.

Why Now is the Time to Act

If you’re thinking of moving, buying, or selling in 2025, now is the time to prepare:

• Buyers: Start exploring your options, securing mortgage advice, and getting your finances in order to act quickly when rates improve.
• Sellers: With buyer demand expected to grow, ensure your property is market-ready to take full advantage of the improving conditions.

At Kings Estates, we’re here to guide you through the changing property market. With mortgage rates set to fall, 2025 offers a real opportunity to buy or sell with confidence.

Whether you’re a first-time buyer, a growing family looking to upsize, or a seller ready to move on, our expert team is on hand to help you make the most of these positive changes.

Contact us today to discuss your next move, book a valuation, or explore the opportunities this new market presents.