Mortgage Expert predicts interest rates will still remain higher than pre-pandemic levels
Hodge Bank’s 2025 Predictions: Interest Rates and House Prices Outlook
- James Enos, Hodge Bank, suggests consumers remain mindful that interest rates will likely still remain higher than pre-pandemic levels.
- The fate of house prices for 2025 are in the hands of consumer confidence and appetite to purchase.
- Hodge Bank anticipates that the year will see moderate change, in both interest rates and housing prices.
As we move into 2025, the housing and interest rates landscapes remain uncertain.
James Enos, National Account Manager at Hodge Bank is offering his expert analysis on the anticipated trends for interest rates and house prices, providing valuable insights for both property buyers and industry professionals.
Despite the challenges posed by an unpredictable economic environment, the bank’s forecast presents a balanced outlook, with cautious optimism and an emphasis on realism.
Interest Rate Outlook for 2025
“We have seen a steady reduction in swaps; however, the market remains unpredictable due to events both at home and overseas. The prevailing expectation is that interest rates in 2025 will largely mirror the levels seen in the past year.
Initially, there had been hopes for multiple base rate reductions in 2025; however, these expectations have gradually been tempered, as more analysts are now considering two base rate reductions as a more realistic scenario.
Our advice to consumers is that they should remain mindful that, even with potential rate cuts, the overall interest rate environment will still likely remain higher than pre-pandemic levels.”
House Prices: Modest Movement Expected in 2025
“Given the current economic conditions, significant increases in house prices in 2025 seem unlikely.
However, certain areas in the UK, particularly those with high demand and limited housing stock, may see slight increases in property values.
These areas could include popular cities or commuter hotspots where demand consistently outpaces supply, driving up prices despite overall market pressures.
On the flip side, regions experiencing low buyer activity could witness price reductions.
Sellers in these areas may find it necessary to adjust their expectations and lower prices to attract prospective buyers, especially if market activity remains subdued.
Conversely, more rural or less in-demand locations may see a cooling effect, as sellers adjust to a slower market and focus on ensuring their properties are competitively priced.”
Current Market Activity and Consumer Sentiment
“Despite the more cautious outlook on house prices, brokers have reported a solid level of market activity early in 2025, with many buyers and sellers remaining engaged.
However, it remains uncertain whether this reflects a standard seasonal surge or whether this signals a broader increase in consumer confidence and appetite to purchase.
It will be interesting to see whether the early activity we’re witnessing is simply a seasonal bounce or the beginning of more sustained momentum in the property market, with consumer confidence playing a crucial role in shaping the housing market in 2025, and we will be closely monitoring these trends in the months ahead.”
Forward-Looking Insights
Looking ahead within the next calendar year, Hodge Bank anticipates a year of moderate change in both interest rates and house prices.
While some stabilisation in the interest rate environment and the potential for modest reductions, can be expected, Hodge advises caution as the global economic landscape remains uncertain. In the housing market, steady demand in key areas may drive slight price increases, while less active regions could see price corrections.
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