Increased mortgage market activity and stamp duty changes set for 2025
The Bank of England reduced the bank rate on 6th February to 4.5%, from 4.75%. This decline is anticipated to translate into lower mortgage rates, benefiting both new purchasers and those looking to refinance.
Key figures for 2024
The latest figures from UK Finance illustrate that throughout 2024, lower inflation, rising real wages and gradual cuts in mortgage offer rates began to ease the affordability constraints which held back the market in 2023. This led to modest annual growth in lending for house purchases, although refinancing markets remained subdued. Gross mortgage lending at the end of 2024 was up by 4 per cent to £235 billion from 2023. Lending for house purchases was also up on 2023 figures by 11 per cent, to £135 billion.
2025
The outlook for 2025 is for a gradual improvement in mortgage affordability, feeding into market growth.
Many factors influence inflation in the UK that in turn influence mortgage rates including:
- War in Ukraine: Increased gas and oil prices, have a knock-on effect on the cost of goods. The Bank of England uses interest rate rises to combat inflation when prices get too high.
- Impact of Trump’s presidency: There’s uncertainty over the impact of Donald Trump’s plans to impose tariffs on all imports to the US on the UK economy.
- Swap rates: What lenders pay to financial institutions to enable them to price their fixed rate funding for a set period of time.
The mortgage market is notoriously difficult to predict.
Stamp Duty changes due in early 2025
What is stamp duty?
Stamp duty land tax (SDLT), is the tax which is paid when you buy a property in England or Northern Ireland. Currently, buyers pay no tax on up to £250,000 of their property’s value. Buying a home at below this price, you would be exempt from stamp duty. At the moment, first time buyers benefit from additional relief. There is no stamp duty up to £425,000 and a charge of 5% up to £625,000.
From 1 April the nil rate for movers will fall from £250,000 to £125,000. Meanwhile, for first-time buyers it will drop from £425,000 to £300,000.
Buyers in Scotland pay Land and Buildings Transaction Tax (LBTT) and in Wales it’s Land Transaction Tax (LTT).
Henry Knight, Managing Director at Springtide Capital Mortgage Brokers, comments:
“It’s good news that we have seen the Bank of England reduce interest rates. Predictions suggest more to come in 2025, with all segments of the market benefitting from easing mortgage rates. It’s also advisable to seek the help of a mortgage broker, as they will ensure that you get the best mortgage deal available to you and your circumstances.”
At Springtide Capital our experts monitor all market indicators closely. Speak to us today to see how we could help you find the solution for you.
Contact Springtide Capital on 020 8154 7280.
Sources:
Bank Rate reduced to 4.5% – February 2025 | Bank of England
Increased activity in the mortgage market anticipated in 2025 | Insights | UK Finance