UK borrowers, including homeowners seeking remortgages and home buyers choosing a mortgage, are dealing with ups and downs in the lending market. This makes it even more important for borrowers, especially those borrowing substantial amounts as homeowners and home buyers would do, to shop for the best deal. Inflation, which was coming under control in the last half of 2024, has grown above target making the predictions of future borrowing uncertain. 

The UK housing market is a complex and dynamic ecosystem, influenced by a multitude of factors including economic conditions, demographic changes, and government policies. Among the key participants in this market, first-time home buyers hold a unique and essential role. Their presence and participation not only stimulate market activity but also provide significant benefits to existing homeowners and contribute to the overall health and stability of the housing sector.

The December housing market data revealed a slight drop in the average house price. It was the first decline recorded since March 2024. However, despite the data released by Halifax, it is considered a temporary drop as the expectation is for a boost in the market in the first quarter of 2025. Halifax reported a 0.2% decline in December from November, with an increase of 3.3% annually, yet still less than the 4.7% annual increase recorded in November. 

For the end of 2024, the UK housing market gave off vibes of continued growth which is what experts have forecasted for this year. Nationwide reported in their data for December the average UK home reached a cost of £269,426 which is an annual increase of nearly £12,000. This is the fourth consecutive month of an increase to the average house price and this trend will likely continue, at least through the first quarter of 2025.

As we step into 2025, the financial landscape for UK homeowners remains a dynamic and somewhat unpredictable environment. The Monetary Policy Committee (MPC) of the Bank of England, after maintaining a high base rate for much of 2024, made two significant cuts, bringing the rate down to 4.75%. Despite these reductions, inflation has proven to be a persistent challenge, with recent figures exceeding the target rate of 2.0% growing from 1.7% to 2.3% and finally 2.6% in November. As a result, many homeowners are facing a critical decision: should they remortgage or allow their loan to transition to their lender's standard variable rate (SVR) at the end of their mortgage term.

As we step into 2025, homeowners and prospective home buyers are keenly watching the Bank of England's Monetary Policy Committee (MPC) for any signs of future base rate cuts. The past year has been a rollercoaster for mortgage interest rates, with the MPC only making two cuts to the standard base rate in 2024, reducing it from a 16-year high of 5.25% to the current 4.75%. The journey to the lower rate was a long wait through the year for the first cut, and while a second came toward the end, the hopeful third cut was not to be.