“I’m expecting 2025 to be one of the busiest,” says Jonathan Fowler, founder and managing director of mortgage broker Fowler Smith, who sets out his expectations for the mortgage market.
The festive period is usually assumed to be a quiet one. At Fowler Smith, we saw quite the opposite. In December, we had submitted 47 applications as a whole, and have clients ready to proceed with new applications in January.
The general consensus is that 2025 is going to be a very busy year in the mortgage market.
Looking back to 2020, rates were rising and most clients were locking in for five-year fixed rates to avoid unknown increases during an uncertain time. Those fixed rates come to an end in 2025.
According to UK Finance (ukfinance.org.uk), it’s estimated that lenders are going to loan out a gross sum of £260 billion. This is 11% up compared to 2024. It’s also anticipated that arrears should hopefully reduce by 5% – which should be a sign of mortgage market confidence regarding reducing interest rates.
Property investors are diversifying
Interestingly, the estimations assume that lending on new buy-to-let purchases would be down by 7% – but I don’t see this as a negative.
I’ve mentioned previously that I think landlords are now going to be diversifying their portfolios a little more – perhaps picking up some ‘against the grain’ investment properties – perhaps some student accommodation, or niche social housing lets.
When they do this, they might look to refinance their existing portfolio and buy without debt attached to the new property – so these statistics may potentially be a little skewed.
We also saw some welcome signs from property listing giant Rightmove, who on the 30th December published that on the 26th December 2024, there were 26% more properties listed on the portal compared to the same date the year previous.
Many economists are also predicting further base rate cuts this year. According to BusinessMatters, a recent survey of 51 economists are expecting base rate to reach 3.75% or lower this year. Considering the base rate had sat at a high of 5.25% as recently as July 2024, this is very welcome news in the industry.
Swap rates and the mortgage market
What I hope to see, however, is for swap rates to fall further, which will directly impact the mortgage market.
We’ve had a fairly volatile period when looking at SONIA swaps over the past few months. This is no doubt partly in relation to UK and global political changes, and the never-so-closely-watched inflation figures, and economic growth reports.
In the mortgage market, the frequent emails from lenders announcing either interest rate increases or decreases is something we are growing tired of. Back in 2019, we’d usually see very infrequent rate changes – perhaps at the end of the month, with fairly minimal adjustments.
I don’t think we’re going to see such smooth sailing in 2025, but as long as there’s a positive landscape outlined ahead, there should hopefully be some more stability.
Growth in specialist lending
What I personally foresee for 2025, other than an exceptional number of remortgages and keen investors still making the most of promising opportunities, is an increase in specialist lending in the mortgage market.
Investors want to seek out deals that promise a better return on investment than the norm, and they’re willing to search harder for the right deal. With the base rate expected to decrease further, are people going to pull cash out of their higher-yielding savings accounts and put it into property? I still think so.
The saying that there’s nothing safer than houses will be a mindset us Brits, and those further afield, will struggle to shake off.
I, and my team, are excited for 2025. It’ll be a busy, diverse and extraordinary year, and I think those with an interest in property will be thinking the same.
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