Base rate almost "Guaranteed" to come down in May!
- Stamp duty rush caused mortgage completions to jump by 50 per cent in March.
- The housing market dampens in April following the expiration of the stamp duty break.
- Asking home prices hit a new high, whilst prospective buyer registrations decreased.
- The base rate is almost guaranteed to come down in May.
- The average house price in England & Wales is £286,032 (5.2% up on last year).
- Heatpumps...another missed Government target for net-zero.
- Choice of low-deposit mortgage deals reaches highest level since 2008.
- The end of spring and summer will see a very buoyant housing market.
Those working in the housing market let out a huge sigh of relief following the mad rush of clients looking to complete before the stamp duty change on 1st April. This has caused a huge spike in sales volume for March, yet to be reported by the Land Registry data below. Barclays has reported that mortgage completions jumped by 50 per cent in March, the highest increase over three years. The increase in the volume of completions was even higher for first-time buyers, who were up 70 per cent compared with February.
From 1 April, first-time buyers in England and Northern Ireland have paid stamp duty on property prices of £300,000, down from £425,000. For other homebuyers, the threshold at which buyers begin to pay the tax has dropped from £250,000 to £125,000. In our March 2025 Report, we reported on the impacts of stamp duty changes on the market, and this April is following suit with a marked dampening of activity. When this is added to low market confidence and the mounting concern about the outlook for the UK and global economy, it could be months before the market gains momentum again.
The Royal Institution of Chartered Surveyors' (RICS) measure of new buyer enquiries fell to its lowest since September 2023 at a net balance of -32 in March, down from -16 in February. RICS chief economist Simon Rubinsohn said:
The expiry of the stamp duty break was always going to lead to a pause in activity in the sales market. However, the latest results ... suggest that the shift in sentiment has been aggravated by the slew of negative macro newsflow over the past few weeks
Source: Simon Rubinsohn, RICS Chief Economist
Asking prices for homes hit a new high
Rightmove reported that the average price of a home coming to market rose 1.4 per cent in April to a record £377,182, and the number of agreed sales falling through in recent weeks has remained steady. This suggests that would-be buyers have continued their purchases even if they missed the stamp duty deadline.
Figures also highlighted a divide amongst regions, as all regions in the Midlands and the North have achieved new price records in April. Still, the South-East and South-West, where houses are relatively more expensive, continue to fall behind.
Prospective buyer registrations decreased
Propertymark, a UK-based professional body that regulates approximately 17,800 agents, reported a fall in buyers registering at their estate agent branches. The average number of new prospective buyers registered per member branch decreased to 81 in February 2025, down from 87 in January.
With increasing post-stamp duty costs, rising asking prices, and fewer buyers in the market, during spring/Summer, we'll see offers well under the asking price. Nathan Emerson, Propertymark CEO, said:
Moving forward...these additional Stamp Duty changes will likely be absorbed into the overall price of the property, allowing a healthy mix of properties and prospective buyers to continue as we move into the historically popular spring and summer months to buy and sell.
Source: Nathan Emerson, CEO of Propertymark
Will we achieve the heat pump target?
In September 2023, the Tories planned to grow the heat pump market to 600,000 installations annually by 2028. This target is critical to the UK's net-zero ambitions.
To achieve this, the Future Homes Standard will make the installation of heat pumps compulsory for new UK homes starting in 2025. Existing homeowners do not currently have a requirement to switch to a heat pump, but the government is offering significant incentives to encourage voluntary adoption.
With new-build property only hitting 154,000 a year, Government incentives must improve. The Resolution Foundation think tank reported that gas boiler fittings outnumbered heat pumps by 15 to one in the UK last year. The key challenge to achieving the annual target is offering an affordable solution for poorer-income households.
Read more about the current incentives and how to apply: Apply for the Boiler Upgrade Scheme
Will mortgage rates go down in May 2025?
The Bank of England's Monetary Policy Committee (MPC) meets on 8th May, and most economists are certain the interest rate will be cutto 4.25%; some suggest 4%.
The Governor of the BOE, Andrew Bailey, alluded to the same this month when he stated that the MPC needs to “take seriously” the risk to UK economic growth from US tariffs. The MPC must consider these impacts before its upcoming interest rate decision, which indicates a likely cut.
Inflation also shows positive signs for a base rate change as the Office for National Statistics reported it slowed to 2.6% in March, the lowest level since October 2024. This is down from 2.8% in the 12 months to February, below the market/BoE's forecasts of 2.7%. The largest downward contributions came from recreation and culture (2.4% vs 3.4%), mainly games, toys and hobbies (-4.2%) and data processing equipment (-5.1%).
So an almost guaranteed rate cut, but by how much? Former deputy governor Charlie Bean has said the Bank of England should cut interest rates by at least half a percentage point to four per cent. He feels an aggressive strategy is needed to combat the fallout from the tariffs and that uncertainty over the next few weeks would force businesses to delay investments and hit consumer spending.
I think the Bank of England will take a controlled approach and reduce the base rate to 4.25% on 8th May. The uncertainty around the US tariffs and the opportunity to react again at the very close June meeting, thus giving the MPC breathing space to take a controlled approach and test the market's reaction with smaller movements.
Source: Andrew Boast, CEO of SAM Conveyancing
The upcoming MPC announcements on Bank Rates are on the 8th May, 19th June, 7th August, 18th September, 6th November, and 18th December.
How many properties are changing hands? Sales Volume Trends
England & Wales
December 2024 witnessed a significantly lower sales volume across England and Wales, with only 40,548 transactions recorded, a stark 26.2% decrease compared to December 2023.
The average house price in February 2025 stood at £286,032, showing a 5.2% increase compared to February 2024 (£271,778). A continued trend of increasing property prices and falling volume means an increased need for affordable mortgages, with lower deposits. Something mortgage lenders are now offering, which we cover below.
The 10-year trend for December sales volume further emphasises the current market slowdown, with 2024 recording the lowest figure in a decade.
In contrast, the average house price has substantially increased since December 2014 (£202,280), reaching £285,266 in December 2024.
This divergence between falling sales and rising prices suggests a market where supply and demand dynamics are complex, with potentially fewer motivated sellers and resilient buyer demand keeping prices buoyant.
The monthly price trend shows a steady, albeit gradual, increase over the past year. Despite the significant drop in December sales, the 5.2% annual price growth in February 2025 suggests that underlying factors such as limited housing stock and continued, albeit potentially cautious, buyer interest are preventing a sharp price correction.
This creates a nuanced market in which sellers may still achieve strong prices despite a reduction in overall transaction numbers.
Mortgage approval reports
Home buyers
NOTE: March 2025 mortgage data will be available from 1st May 2025.
Despite the significant volatility of the mortgage and remortgage market over the past five years, we have seen a strong recovery from the low point in February 2023 (-37% YoY). February 2025 saw an 8% increase to 65,481 on February 2024 (60,496), a positive 40% increase from 2023 (43,218).
The stamp duty deadline will have fueled this, and I expect April mortgage stats to be more in line with last year.
Remortgages
The remortgage market presents a different picture. February 2025 saw a 12.2% decline YoY, with remortgages falling to 31,976. Homeowners are more inclined, either by choice or not, to wait for the affordable mortgage options.
I think this coincides with longer-term mortgages, meaning that remortgages will decline over the next year. This will change, though, because the more regular movement within the interest rates could mean borrowers are secure for shorter terms on the hunt for the best long-term deal.
Choice of low-deposit mortgage deals reaches highest level since 2008
Moneyfacts has reported that there are more low-deposit mortgages available than at any time since the financial crisis of 2008. A low deposit mortgage is anything from 5 to 10%.
- 5% Deposit. There are 442 products, up from 204 in April 2023.
- 10% Deposit. There are 845 products, up from 684 in April 2023.
This reflects the first-time buyer's need for mortgage funding with a lower deposit. Simply put, they can't afford 10% or more of an average-priced home. Nor can they wait to save up, as the goal post of an average-priced home keeps moving further away.
Rachel Springall, a finance expert for Moneyfacts, said, "The choice of low deposit mortgages will be welcomed by both first-time buyers and those looking to remortgage. The Government has been clear that it wants lenders to do more to boost UK growth, so a rise in product availability for aspiring homeowners is a healthy step in the right direction.”
Do you know how to apply for a low-deposit mortgage? Click to find out: How to get a mortgage with a 5% Deposit.
How many new-build properties are being built?
The latest data for Q4 2024 (Ministry of Housing, Communities and Local Government) presents a mixed picture for new build activity. While new build starts have seen a significant surge, increasing by 51.5% year-on-year, the number of completions has declined by 8.8% over the same period.
The government's target of 300,000 new homes per year remains a key policy objective. Streamlining planning processes, securing development land, ensuring skills availability, expanding infrastructure, and incentivising private enterprises will be crucial if Labour wants to reach its target.
The strong growth in starts during Q4 2024 is a positive step towards increasing the new housing supply. However, the decline in completions indicates that the delivery of new homes is still facing headwinds.
Andrew Boast FMAAT
CEO of SAM Conveyancing
There are very few occasions in recent years where the housing market could almost guarantee that the base rate will fall. The question is by how much? I think the BOE will adopt a slow and steady approach and reduce the rate to 4.25% during their 8th May review.
The housing market will be motivated by this, and the seller will absorb the stamp duty changes in negotiations as we see offers agreed under asking.
The next few months will be exciting for the housing market as it blooms later this year, like the spring. With more affordable mortgage products, allowing lower deposits (equity), I expect a strong end to Spring and a buoyant Summer for both home buyers and remortgages.
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).
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