Should I Stay, or Should I Go?
Written on 9 March 2025 by
Navigating the Property Market in 2025 for Buying a House
I never thought I’d be naming a property blog after one of the greatest rock bands, The Clash, but their lyrics feel particularly fitting for anyone currently grappling with a major property decision.
For those looking to purchase their first home or move up the property ladder, the past couple of years have been turbulent. Rising house prices, record inflation, and fluctuating mortgage rates have left many unsure of their next steps. However, with 2025 bringing slight economic stabilisation, is now the right time to buy, sell, or stay put?
House Price Trends and Mortgage Rate Predictions
House prices are expected to see a similar increase in 2025 as in 2024. The Office for Budget Responsibility (OBR) had predicted a 9% fall by late 2024, but with inflation easing and mortgage rates stabilising, the downturn appears to be less severe than feared.
Earlier this year, I had anticipated that two-year fixed mortgage rates would fall below five-year fixed rates by Q2 2025 and remain lower for the rest of the year. However, based on the latest economic data and shifting market expectations, it now looks more likely that this crossover will occur in mid to late 2025.
The primary reason behind this expected shift is the evolving outlook for interest rates. The Bank of England has already begun reducing the base rate, with further cuts expected over the next 18 months. Initially, markets had priced in a more aggressive pace of reductions, which would have brought down short-term borrowing costs more quickly. However, recent inflation figures remain higher than anticipated. While further rate cuts are still expected, they may be introduced more cautiously than previously thought.
A key factor influencing mortgage pricing is the shape of the yield curve and swap rate movements. Swap rates, which reflect market expectations of future interest rates, typically guide how lenders price fixed-rate mortgages. When investors anticipate significant rate cuts in the near term, shorter-term swap rates tend to fall more quickly than longer-term swap rates, making two-year fixed mortgages cheaper relative to five-year fixes. However, because the expected pace of rate reductions has slowed, the yield curve remains relatively flat, meaning that lenders have not yet adjusted pricing in a way that would push two-year fixed rates below five-year rates. As market sentiment shifts and swap rates respond to confirmed rate cuts, we are likely to see this trend take shape, but on a longer timeframe than previously expected.
Another important factor is borrower behaviour and lender strategy. When rates are expected to fall further in the coming years, many borrowers tend to opt for shorter-term fixes, anticipating an opportunity to refinance at a lower rate sooner. In response, lenders may adjust their pricing to manage demand and risk, which could contribute to a scenario where two-year fixed rates fall below five-year fixed rates. For example, Santander has a higher product fee of £1,999 to help offset any rises in the cost of borrowing while maintaining a 3.99% two-year fixed rate. I expect to see similar moves from competitors, where lenders structure their mortgage products with higher fees to keep headline rates more attractive, particularly on shorter-term deals, without affecting their margins.
While I had originally expected this shift to happen in Q2 2025, the current trajectory suggests that mid-to-late 2025 is a more likely timeframe. Of course, this projection remains subject to change based on how economic conditions evolve in the coming months.
When is the Right Time to Buy?
If you're planning to buy a home in 2025, timing is everything. While no one can predict the perfect moment to buy, historical trends suggest that certain seasons offer more opportunities:
- Spring and autumn - typically see higher property listings, offering buyers more choices
- Late summer and winter - often see reduced competition, allowing for better negotiations with sellers
While some buyers may wait for further price drops, others recognise that securing a property at a competitive mortgage rate today can outweigh potential savings from a lower purchase price later. The key is ensuring affordability, not just hunting for the lowest price.
How Long Does it Take to Buy a House?
The time it takes to buy a house typically ranges from 30 to 60 days once an offer is accepted, but the entire process - including searching, financing, and closing - can take several months. Factors like mortgage pre-approval, market conditions, and surveys can speed up or delay the timeline. Cash buyers typically complete faster, while those needing a mortgage tend to take longer.
Understanding Seller Motivations
Sellers are also strategising around market conditions. Many will list their homes during peak seasons to attract multiple offers, while others may choose quieter periods to stand out. A recent MPowered House Price Index report found that:
- 66% of sellers prefer chain-free buyers for a faster and smoother sale.
- 29% are willing to accept higher offers from those in a chain to offset risks.
- 10% of sellers wait for at least five offers before accepting a deal.
With sellers being more selective, having your mortgage pre-approved can significantly improve your chances of securing a property in competitive markets.
Should You Wait for a Recession to Buy?
One common question among buyers is whether they should wait for a potential recession to lower property prices further. While a downturn might push prices down slightly, it could also lead to:
- Reduced housing supply as sellers hold off listing their properties.
- Stricter lending conditions, making mortgage approvals more difficult.
- Increased competition when prices start rising again, potentially negating any savings from waiting.
Ultimately, trying to time the market perfectly is a gamble. Instead, focus on long-term investment potential, affordability, and personal financial stability when making your decision.
The Role of a Mortgage Broker
Whether you're a first-time buyer or a seasoned homeowner, working with a whole-of-market mortgage broker can be invaluable. Here’s why:
- Save Time & Reduce Stress
Brokers have access to thousands of mortgage products, helping you secure the best deal without the hassle of comparing rates yourself. - Stay Ahead of Market Changes
With rates constantly shifting, brokers receive advance notice of lender updates, allowing them to act quickly on your behalf. - Secure the Best Mortgage for Your Situation
The lowest rate isn’t always the best option. Brokers assess additional costs like lender fees and valuation charges to find the most cost-effective mortgage. - Gain Access to Exclusive Deals
Many lenders offer special mortgage rates exclusively through brokers, potentially saving you thousands over the life of your loan. - Expert Advice in Uncertain Times
With media speculation on housing market crashes and rate spikes, a broker provides unbiased guidance tailored to your circumstances.
Final Thoughts: Should You Buy a House Now or Wait?
Waiting for the “perfect” market conditions could mean missing out on a great opportunity. If you’re financially ready and have found a property you love, now may be the right time to act.
To explore your mortgage options and make an informed decision, get in touch with one of our expert advisers today. Call us on 0808 303 5528 or enquire online.
Category:Nicholas Mendes
