Mortgage demand from home buyers expected to fall back in early 2025, lenders say
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Banks and building societies are bracing for a fall in mortgage demand from home buyers early in 2025, following a year-end increase last year. A recent Bank of England survey showed an uptick in mortgage requests in the last months of 2024, but projections point to a downward turn come the beginning of 2025.
Simon Gammon, from Knight Frank Finance, said: "Clearly, the lenders think that the beginning of 2025 will be another period of sluggish activity in the housing market. As things stand, this is likely to prove true.". Amid bond market shake-ups potentially affecting certain mortgage costs, it looks like there's room for optimism. Citing encouraging inflation updates from the UK and US, Mr. Gammon added: "That said, fairly positive inflation data from both the UK and the US this week has calmed bond markets, which suggests we’ll see a swift repricing, rather than weeks of sustained increases in mortgage rates.".
Some recent housing market reports have pointed to buyers aiming to complete deals before stamp duty discounts become less generous. From April 1 2025, the “nil rate” stamp duty threshold for first-time buyers will decrease from £425,000 currently to £300,000.
The Credit Conditions Survey has revealed that demand for remortgaging saw an uptick in the three months leading up to the end of November, but is anticipated to dip in the following quarter. Meanwhile, credit card borrowing is set to see a slight increase as we approach the end of February.
Lenders have noted that the duration of interest-free periods on new credit cards for purchases and balance transfers has grown as 2024 came to a close, with expectations for this trend to continue into early 2025. Mortgage default rates experienced a minor rise in the three-month period to November, but are predicted to remain stable in the next quarter.
