Hello and welcome to my last mortgage column of 2024.
To finish off the year, I wanted to give you an insight into the current mortgage and property world, and how things are looking for the next 12 months ahead.
When I wrote my first column at the very start of 2024, the Bank of England base rate was at 5.25% and inflation was at 3.9%.
While this made borrowing and the cost of living more expensive, both have thankfully come down over the course of the year. The base rate is now sitting at 4.75% and inflation at 2.3% at the time of writing, taking some of the pressure off borrowers.
However, people are still feeling the pinch in several areas – particularly those coming off historic low interest rates, who are having to pay a higher monthly payment on a new higher rate.
Here’s an overview of what you could expect for the property and mortgage market in West and Central Scotland in 2025:
House prices
House prices in areas like Glasgow and nearby suburbs are expected to rise slightly. Some buyers are focusing more on homes with features such as good insulation or solar panels, as they can help reduce energy bills. New housing developments are starting to include these eco-friendly features to attract buyers.
In city centres, apartments and smaller homes are becoming more popular again. People are returning to urban living, with hybrid work models allowing them to balance working from home and commuting to the office.
Buying a home
More people, especially first-time buyers, may find it easier to enter the market next year, as mortgage rates slowly start to come down. However, with fewer homes for sale and rising prices in popular areas, competition will still be tough.
Suburban areas like South/North Lanarkshire and East Renfrewshire are gaining popularity, as they offer more space and good transport links.
Mortgages
Mortgage costs should start to drop in 2025, as interest rates go down compared to the last couple of years, making it slightly easier and cheaper to borrow money.
However, banks are still cautious about lending, so buyers might still face stringent affordability checks on their finances.
There’s no certain way of knowing how it’s going to pan out over the next few months, or even years. Making decisions on whether to buy a property or remortgage with a shorter or longer-term fixed rate is more of a personal choice, and needs to be tailored to your own plans for the short and medium term.
Remember that the actual interest rate on a mortgage is only one factor of how much you will pay each month. The level of borrowing and the mortgage term also has a direct impact on your monthly payments, so a tailored solution can sometimes mean the fluctuation or increase in rates isn’t as hard hitting as you may think.
Challenges
Not enough homes: There’s still a shortage of homes available for buying and renting, which keeps prices high and makes the market competitive.
Affordability: Rising living costs mean that many people are struggling to save for deposits. but there are a few lenders offering low deposit mortgages.
In short, 2025 should bring some improvements, such as cheaper mortgages and more eco-friendly homes, but challenges like limited supply and high costs will remain.
Buyers will still need to carefully plan to make the most of the market, and existing mortgage holders would be wise to review their options once they’re within six months of their current deal ending.
The great thing about using a broker to review your options is they will take the stress and hassle away from you when arranging the mortgage. They’ll deal with the lender directly on your behalf, providing a tailored solution specific to your personal and financial circumstances.
Thanks for reading, and I wish you a very Merry Christmas and Happy New Year.
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