The festive season is a time that really focuses the mind – and it’s really focussed ours. Mainly in the sense that it doesn’t feel that long ago since we last wrote a piece looking ahead to the next year.
However, after quite an interesting (and by interesting we mean erratic) year for mortgages, we thought that a Maidenhead mortgage broker’s take on what the next 12 months means for mortgage hunters might be of interest.
So, if you’re planning on getting a mortgage in 2025, here’s what our team of Berkshire mortgage brokers think.
The best mortgage deal of today might be THE best mortgage deal for a while
Throughout 2024, there was an ongoing ‘let’s wait and see’ approach as homeowners and first-time buyers sat on their hands waiting for rates to fall. This was fed, in part, from experts predicting that the base rate would fall and, with it, mortgage rates, too.
This resulted in caution … and LOTS of it.
People were scared to get a mortgage one day to find out that the rate had fallen the next, so they waited. This approach is unlikely to work in 2025, according to Richard Alton, Director at Alton Mortgages:
“2024 was a tumultuous year for the mortgage market. However, 2025 looks set to be much more stable – although that stability is likely to come with a price. Whilst inflation and the Bank of England’s base rate of interest fell over the last 12 months, the new government’s first budget saw the largest tax increases in three decades, the result of which – in addition to rising swap rates – saw lenders increase their mortgage rates. We believe that rates are going to remain pretty steady over the next 12 months, but steady at rates slightly higher than what we’ve become accustomed to. As 2024 ends and 2025 begins, our team of Maidenhead mortgage brokers believe that today’s rate might be the best rate we’ll see for a while. 2025 won’t be about waiting for rates to fall, but about getting the best rate before they increase!”
How high will mortgage rates go in 2025?
Type ‘what will mortgage rates be in 2025?’ in Google and you’ll be rewarded with a plentiful supply of 2025 mortgage predictions. However, whilst predictions are somewhat reassuring for those considering getting a mortgage in the New Year, they are just predictions. Nobody really knows what’s around the corner.
Having said that, our team of mortgage brokers in Maidenhead all believe that mortgage rates will balance out between the 5.25 and 5.5 percent mark for five-year fixed mortgages and two-year fixed mortgages respectively.
That’s not a million miles away from where we are now. However, the reality is that right now, the best fixed rate mortgage deals in the UK are cheaper than what we think they will be in Q1 of 2025.
With that in mind – and considering that there is still over two weeks until mortgage brokers and the UK’s lender close their doors for Christmas – there is still time to get today’s, more preferential rate. Not only that, but given how any offer made by a lender will last for six months*, it makes sense to lock in a 2024 fixed rate mortgage deal today – even if you’re unlikely to move until May.
As Ed Pettigrew, Mortgage and Equity Release Consultant at Alton Mortgages, explains:
“Many people fail to take into account the six-month mortgage offer, which lenders will honour even if there were to be a drastic rise in rates within that timeframe. With so many variables at play such as swap rates, changes to the base rate of interest and even overseas conflict, nobody can ever be entirely sure what mortgage rates are going to be six months from now. So, the smart approach is to secure a mortgage offer now knowing that you have a six-month window in which to take it. And remember, should rates fall – which they could also do – you can simply reapply for the more preferential rate of the day.”
We understand that that things slowdown in the lead up to the festive break. But a quick pre-Christmas call to a mortgage broker today could save you hundreds, if not thousands, of pounds tomorrow.
Our team of Maidenhead mortgage brokers are on hand until 24 December, when we close until 2 January, so why not take advantage of the last of the 2024 rates in case the predictions are correct and rates do increase.
*Alton Mortgages recommends treating the six-month window as a five-and-a-half window, as it can take a couple of weeks to finalise the mortgage; if you leave it too long and the offer expires, you will have to reapply based on the rate of the day.
Would you like to get a mortgage offer in place before rates increase? If so, contact our Maidenhead mortgage brokerage on 01628 560820 or email enquiries@altonmortgages.co.uk to arrange an initial mortgage consultation.