UK House Prices Dip And Mortgage Rates Fall In 2025

UK House Prices Experience a Slight Decline

UK house prices dipped by 0.2% between November and December 2024, marking the first decrease since March, according to Halifax. Despite this minor setback, prices remain 3.3% higher compared to the same time last year. However, mortgage approvals have dropped to their lowest level since August, signaling cautious buyer sentiment as 2024 comes to a close.

Mortgage Rates Reduced by Major Lenders

Halifax and Leeds Building Society have kicked off 2025 by reducing mortgage rates. Halifax decreased rates for remortgages by up to 0.35% and by 0.15% for new borrowers. Their two-year fixed-rate mortgage now starts at 4.49% with a 40% deposit. Leeds Building Society cut rates by 0.21%, offering five-year fixed deals starting at 4.25%. Experts predict further rate reductions could be on the horizon if the Bank of England's base rate declines, offering potential savings for those on variable-rate mortgages or refinancing in 2025.

Innovative Mortgage Scheme for Renters

TSB has launched an innovative "5&5" mortgage scheme designed to help renters step onto the property ladder. Tenants can benefit from a 5% discount on the market value of the property they rent if they provide a minimum 5% deposit. This scheme offers dual advantages: it helps tenants purchase their current home at a reduced price while enabling landlords to bypass estate agent fees and enjoy a smoother sales process.

Construction Growth Slows Amid Housing Market Challenges

December saw the UK's construction sector growth slow to its lowest level in six months. The S&P Global Construction PMI dropped to 53.3 from 55.2 in November, largely due to reduced house-building activity. High interest rates and fragile consumer confidence have posed significant challenges for builders, adding pressure to the housing market.